Many older Americans today depend on their Social Security benefits for a stress-free
retirement. But it’s important to claim those senior benefits at the right time.
If you were born in 1960 or later, the right time might be age 67, since that’s
your full retirement age. And at that point, you’re eligible for your monthly
benefits based on your personal wage history without a reduction.
But waiting to claim Social Security benefits beyond age 67 could boost your
monthly checks by 8% a year until age 70, so it’s important to ask these
questions before taking benefits at 67.
Can I keep working for three more years?
Delaying Social Security until age 70 could result in boosted monthly checks for
life. If you don’t have a lot of savings, that extra income could come in very
handy.
Plus, Social Security benefits are eligible for a cost-of-living adjustment each
year. The larger your benefits are each month to begin with, the more valuable
those yearly raises should be.
If you think it’s feasible to continue working another three years, then holding
off on taking Social Security at 67 may be doable. But things could get trickier
if you have to retire at 67. And that may be the case if your company is
shedding headcount, you do physical work you’re struggling to keep up with, or
you’re just plain burned out and need to bring your career to an end for the
sake of your mental health.
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Can I afford to retire and wait three more years to take benefits?
If you know that working three more years isn’t doable, the next question to ask
before claiming Social Security at 67 is whether you have enough savings to
cover your costs until age 70. If you have a large nest egg, tapping your
savings for three years to wait on benefits may be possible.
That said, if your savings will be your only income stream between
the ages of 67 and 70, you’ll need to make sure you have a nice cash cushion in
case the stock market crashes, and it’s a bad time to sell investments for money.
You should ideally plan on having three years’ worth of living costs in cash if
you’re going to stop working but also delay Social Security.
Is waiting likely to result in a larger lifetime paycheck?
Waiting beyond age 67 to claim Social Security could result in larger monthly
checks. But it won’t necessarily result in a larger lifetime check for you.
You’ll need to think about the state of your health and your family history when
making that decision.
If your health is great, you may be more likely to live a longer life, which would
make a delayed claim make sense from a financial perspective. But if your
parents passed away in their 70s and you already have health issues, you may
want to consider filing for Social Security at 67 instead of pushing yourself to
wait until 70.
A good exercise in this situation is to calculate your break-even age, which is
the age when you’d receive the same lifetime benefit by filing for Social
Security at 67 versus 70.
If you’re eligible for $2,000 a month in benefits at 67 but wait until 70 to
file, you’ll be bumped up to $2,480 a month. At age 82 1/2, you’ll have broken
even with a lifetime benefit of $372,000.
So what you need to ask yourself is whether you think you’ll live past age 82 1/2.
If so, then waiting to file for Social Security could result in a larger
lifetime paycheck for you.
What does my spouse plan to do?
If both you and your spouse are eligible for Social Security, you should discuss
your filing strategies jointly. If you and your spouse are the same age and your
spouse is set on taking benefits at 67, then it may be feasible for you to wait
since you’ll have one set of monthly checks to spend immediately.
It could especially pay to delay Social Security in that scenario if you’re the
higher earner. If your spouse outlives you, they’ll be entitled to survivor
benefits from Social Security equal to the amount you were eligible for. Boosted
checks could leave your spouse with a lot more monthly income for life.
Bottom line
Your Social Security benefits will probably play a big role in your retirement plan and
income. So it’s important to claim them at the right time.
While filing for benefits at 67 could make sense since you won’t be looking at a
reduction, there’s a clear advantage to waiting. But whether it makes sense to
file right away versus wait depends on your work status, savings level, health,
and household income needs. You should take all of these points into
consideration when deciding whether to file right away versus sit tight for a
few more years.
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Author Details
Maurie Backman
Most retirees will make their Social Security claiming decision exactly once, which is why Maurie Backman has spent more than 20 years helping them understand it. She covers benefit calculations, COLA forecasts, and the policy changes that quietly reshape what retirees receive each month. Her work has appeared in Kiplinger, The Motley Fool, 24/7 Wall St., Bankrate, and U.S. News & World Report.
