Most personal finance experts agree that delaying your Social Security benefits until they max out at age 70 is the smart move for most people.
There's just one problem with blanket advice like that: Personal finance is personal. And while the majority of people might be better off by waiting to claim their Social Security benefits, there's still a good chance you shouldn't wait so long.
The data backs that up. A 2019 study from United Income found 57% of adults will maximize their chances of affording retirement by waiting until age 70 to claim their Social Security benefits. That's a clear majority. But it also means there's a 43% chance any given person will do better by claiming before their 70th birthday, despite the reduction to their monthly payout.
It's important to weigh various factors to determine when to start Social Security. Here are a few to consider to help you determine whether you should wait until 70 or claim earlier.
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Good reasons for claiming Social Security early
The primary benefit of claiming your Social Security retirement benefits before age 70 is that you start receiving that source of retirement income sooner. That could be a major lifeline for some, especially those who were forced to retire earlier than planned and didn't have a chance to build their retirement savings as much as they desired.
When you claim benefits early, you reduce your monthly check relative to what you'd receive by claiming later. The program was designed such that each retiree will collect roughly the same total amount in benefits over their lifetime, regardless of what age they claim. However, improvements to life expectancy have outpaced changes to Social Security, resulting in a slight advantage to delaying benefits, on average.
But if you have reason to believe your life expectancy will be shorter than average, it probably makes sense to claim well before age 70. Getting to age 70 and beyond is far from guaranteed, especially for someone with a health condition.
You might also want to claim your benefits before reaching 70 if you plan to collect spousal benefits. Spousal benefits max out when you reach full retirement age, so there's no point in waiting until 70. And if you're caring for a child of your spouse younger than 16, you won't see any reduction in benefits regardless of claiming age. Even if you have to wait for your spouse to claim benefits, it's likely worth collecting your own benefit starting at full retirement age.
The benefits of waiting
The odds are you'll maximize your lifetime benefits by waiting until age 70 as long as you have no reason to expect a shorter-than-average lifespan. Delaying until 70 also ensures you'll receive a bigger cost-of-living adjustment (COLA) every year on an absolute basis, since the COLA is based on a percentage of your previous year's monthly benefit. But there are other considerations to take into account.
If you continue working while collecting Social Security before your full retirement age, you'll be subject to the retirement earnings test. If you earn over a certain amount in wages, the Social Security Administration will withhold part of your Social Security check. Once you reach full retirement age, it'll adjust your benefits check to account for the withheld amount. The reduction in your monthly check could throw a big wrench in your budget if you were planning on receiving the full amount.
If you were the high earner in your household, it might make sense to delay until age 70, especially if your spouse has a long life expectancy. That's because you need to consider how survivor benefits will impact your widow or widower. Losing one partner's Social Security income upon death can have a big impact on the surviving spouse's budget, so it makes sense to maximize that income as much as possible.
There are plenty of pluses and minuses to claiming early versus waiting until age 70. There's a good chance your circumstances suggest you should claim early. But if you have no reason to think you should claim before 70, the data shows you're probably better off waiting. Just be sure to take all of the necessary considerations into account.
