Only 10% of People Plan to Make This Optimal Social Security Move

A Gallup poll conducted in January found that 45% of respondents were satisfied with the Social Security and Medicare systems, and a matching 45% were dissatisfied. It's easy to guess why someone might be satisfied, as Social Security provides around 30% of retirement income to the elderly.

Why might someone be dissatisfied? Perhaps because they need or want more from the program. The average monthly retirement benefit, after all, was $1,837 as of June -- about $22,000 on an annual basis. Fortunately, there's a key way to maximize your future Social Security benefits, though only 10% of folks plan to do so.

Image source: Getty Images.

Timing matters

If you're married and you both collect that average Social Security benefit of $22,000 per year, you're still only collecting $44,000. Consider that the median household income in America was around $71,000 as of 2021. So how can you increase your future Social Security benefits? A powerful way to do so is to delay starting to collect them.

Everyone has a "full retirement age" at which they can start collecting the full Social Security benefits to which they're entitled, based on the Social Security Administration's record of their earnings over time. For most workers today, that age is 67.

You can actually start collecting your benefits as early as age 62, though. If you do, your benefit checks will be smaller -- but you'll collect many more of them. Delaying beyond your full retirement age will beef up your benefit checks by about 8% for each year until age 70. Check out the table below, to see the effect of turning on the spigot earlier versus later.

Source: Social Security Administration. 

By waiting until age 70 to claim your benefits, you can make them 24% bigger. So that average $1,837 check could become a $2,279 one, delivering around $27,000 on an annual basis. If you're expecting a monthly benefit of, say, $2,800, a 24% bump would get it to $3,472 -- bumping it from $33,600 to $41,600.

Only 10% plan to delay until age 70

According to a recent report from the investment management firm Schroders, though, only 10% of pre-retirees plan to wait until age 70 to start collecting Social Security checks. That's a discouraging figure, but it's easy to understand, too. After all, many people end up retiring earlier than they'd planned, perhaps due to a job loss or a health setback. Many retirees and near-retirees simply need whatever income they can get, as soon as they can get it. And anyone who isn't in good health and/or has a decent chance of living a shorter-than-average life might get the most from Social Security by starting to collect benefits early. (Indeed, those who live average-length lives will collect roughly the same total income over their retirement no matter when they start collecting benefits.)

Here are the reasons offered in the Schroder survey why 90% of people plan to claim their benefits before age 70:

• 44% said they were concerned Social Security may run out of money/stop making payments
• 36% said they will need the money
• 34% said it was their money and they wanted access to it as soon as possible
• 13% said they were advised to take it earlier than age 70

Some of those reasons are better than others. Yes, it's their money, but if they can wait, they may collect more of their money over time. Yes, the Social Security program is facing challenges, but it's not going to completely run out of money any time soon, and Congress has the power to bolster and even strengthen the program.

What should you do?

If you can and if it makes sense for you, consider aiming to delay claiming your benefits until age 70. Consider your whole retirement plan, too, and fit your Social Security timing plan into it -- and if you're married, have a coordinated plan for when you'll start Social Security. In order to delay to age 70, you might need to be creative, such as drawing from other financial accounts for a few years until your benefits start rolling in.

Remember that Social Security income is very much like an annuity you might buy: The income it delivers is pretty much guaranteed, which gives it an edge over many other income sources. (Yes, there's a chance benefits might shrink if Congress doesn't shore up the program, but there is and will be a lot of pressure from constituents to do so.) It also features automatic cost-of-living adjustments, or COLAs, which can make a big difference -- since after 25 or 30 years of retirement, dollars will likely only have around half the buying power they do today.

Social Security income will be vital to most of us in retirement, so learn enough about it in order to make savvy decisions regarding it. Think hard about being in the 10% delaying claiming benefits until age 70.