Few decisions are more important than when to claim Social Security benefits. While the numbers clearly indicate that waiting until age 70 will score you the highest monthly benefits, it’s not always the right choice.
Timing
Social Security benefits can be claimed as early as 62, although monthly benefits are reduced for filing before full retirement age (FRA) — 67 for those born in 1960 or later. However, benefits grow by about 8% per year between FRA and age 70 due to delayed retirement credits. That means if you’re due a monthly benefit of $2,500 at age 67, you can expect roughly $3,100 instead at age 70.
Here’s the tricky bit, though: Your situation is unique, and while waiting until 70 may be right for a friend or neighbor, it could be the wrong decision for you.
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3 Reasons not to claim Social Security benefits at 70
Anyone planning for retirement has likely heard how much more they could receive in Social Security benefits by waiting. Yet, studies show that only 10% of American workers plan to wait that long. And there may be plenty of good reasons for not waiting. For example:
- Shorter life expectancy: If you deal with chronic health issues or your family history suggests you may have a shorter life expectancy, delaying benefits to age 70 may never allow you to “break even” compared to claiming earlier. Typically, those who live into their early 80s or beyond benefit most from waiting.
- Immediate need: If you’ve been laid off, can’t find work, or lack sufficient savings to pay everyday expenses, you may need Social Security benefits earlier to avoid debt. While no one wants to be in this position, it’s become a way of life for many. While waiting until you’re older would earn you larger checks, those funds may not make up for years of financial strain or the high interest rates you paid on borrowed money during that time.
- Lifestyle costs: If you wait until 70 for larger checks, you may miss opportunities to enjoy travel, hobbies, or time with family while you’re younger and healthier. If you have other resources — such as diversified investments, Treasury bonds, a part-time job, or an annuity — to cover these expenses, waiting until 70 may be the easy decision. If not, you might have to dig down to determine how you want to spend your 60s.
Claiming benefits at 70 may maximize monthly benefits, but it doesn’t maximize well-being for every retiree. The state of your health, cash-flow needs, asset allocation, marital situation, and lifestyle goals must all be weighed as you determine the best age to claim.
