One nice thing about Social Security is that you get a choice when it comes to claiming benefits. You can sign up at any age between 62 and 70, but you won't get your full monthly benefit based on your personal earnings history until full retirement age (FRA) arrives. FRA is 67 if you were born in 1960 or later.
You can also delay your Social Security filing past FRA for a higher monthly benefit. There's no "final age" by which to sign up, so you can file as late as you want.
But it doesn't make sense to delay your claim past age 70 because you won't be rewarded financially for filing past that point. As such, 70 is generally referred to as the latest age to claim Social Security, even though you can technically sign up later.
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You may be planning to file for Social Security at age 70 to snag the highest monthly benefit possible. But doing so could be risky in two regards.
1. You may not live long enough to come out ahead financially in your lifetime
Filing for Social Security at 70 will result in a higher monthly benefit. But it's not guaranteed to leave you with a higher lifetime benefit. If you don't live a very long life, you might end up shorting yourself on income by claiming Social Security at 70.
Let's say you're entitled to a monthly benefit of $2,000 at an FRA of 67. Delaying that claim until 70 would give you $2,480 a month, instead. But if you only lived until age 78, you'd end up with about $26,000 less in Social Security income in your lifetime by virtue of signing up at age 70 versus 67.
2. You may not be able to wait that long
You may decide that you'll work as long as you need to in order to claim Social Security at age 70. But what if you end up having to leave the workforce at a younger age?
It might be that you're downsized out of a job or your health renders you unable to hold down a full-time job. Or you might have to move due to personal circumstances and struggle to find a full-time job in your new location.
If that happens and you've been saving for retirement on your own all along, you're not necessarily in a terrible position. But if you planned to save little for retirement and compensate with a higher monthly Social Security benefit by signing up at age 70, that may not work out so well if, come your 65th birthday, you're forced to claim Social Security and you don't have a healthy nest egg.
Filing for Social Security at age 70 could end up being a smart move, but it's important to understand the risks involved. Consider these pitfalls carefully before making your choice so you don't wind up unhappy with your decision or worse yet, cash-strapped once retirement rolls around.
