If you wait until 70 to take Social Security benefits, you will get a monthly check that's substantially bigger than if you claimed it earlier. You could increase your standard benefit by as much as 24%, with hundreds of extra dollars in your bank account each month.
Despite this, however, you might not want to put off the start of your retirement checks because there's a very good reason it may not pay off in the end.
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You might not get to enjoy all that extra money
The single best reason not to wait until 70 to claim your check is that you'll be giving up years of retirement income you potentially could have had coming to you. And to end up better off as a result of delaying your benefits claim, you have to make up for all of that missed income, which can take a long time.
Let's say you have a full retirement age (FRA) of 67 (the age for anyone born in 1960 or later). That means you'll get your standard benefit at 67. If you claim earlier, you'll shrink your checks; if you claim after, you'll increase them until 70.
Taking your first retirement check as soon as you become eligible at 62 results in a 30% reduction in your standard benefit. So if you were on track to get $1,600 at FRA, you would get only $1,120.
Conversely, you could wait until 70 to start your checks and would increase the amount you get each month to $1,984. That's $864 more per month than if you claimed at 62. But you would have passed up 96 payments of $1,120 (or a total of $107,520 in income) during those years between 62 and 70.
At a rate of an extra $864 per month, it would take you 124.4 payments -- or a little over 10 years of checks -- to break even for the funds you passed up. And you would have to live even longer to enjoy extra money you otherwise wouldn't have received. So, unless you live until well past 80, putting off your Social Security claim wouldn't really benefit you very much financially.
And there's a good chance your health might decline by 70 or soon after. How much can you enjoy a bigger Social Security check if you can't travel or have impaired mobility or illnesses that restrict your options? Wouldn't you rather get your benefits while young enough to enjoy them, and not have to worry about outliving your life expectancy just to break even?
Should you delay your benefits claim?
There are some circumstances where you might want to wait until 70 to file for Social Security. If you fear running out of money late in retirement, if you expect to live a very long time, or if you were the higher earner and want to maximize survivor benefits available to your spouse if you die first, a delayed claim could be the right move.
Before you put off your benefits for a larger future check, just be sure to ask yourself if it's really worth the sacrifice.
