Social Security full retirement age (FRA) is 66-67 for most people, and claimingthen gives you 100% of your calculated benefits. But your senior benefitscheck amount grows about 8% per year for each year you wait after this time andup to age 70, so it may make sense to delay as long as possible.
For someone born in 1960, claiming at 70 results in 124% of the full benefit,but it’s not the right choice for everyone. Here are the signs to look for whendeciding if the delayed path is the correct one.
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1. You’re healthy and expect a long retirement
The longer you live, the more years you’ll collect a higher, delayed benefit.Healthy seniors who think they may reach their mid-80s or later may be goodcandidates to claim at 70. This is about probabilities, however, not guarantees,and you’re banking on the fact you’ll live long enough to enjoy those increasedmonthly benefits.
If someone lives well into their 90s, the higher monthly amount they lock in at70 often outweighs the missed checks in their 60s, especially for singles.
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2. You don’t need the income yet
Another major sign that you can wait until 70 is that you have enough incomefrom work, pensions, or another savings source to cover expenses without SocialSecurity. This isn’t always the case for people in their 60s, but these otherassets can be used as a bridge between FRA and 70.
The reward is faster growth on your future benefits checks (8% per year delayed)than what you would see from high-interest savings or low-yield accounts. Thisworks best if you’re comfortable drawing down savings in exchange for largerSocial Security payments later.
3. You want to maximize survivor benefits for a spouse
If you’re the higher-earning spouse and you delay claiming benefits, the higheramount can be the basis for a surviving spouse benefit if you die first. Thatmeans your spouse can have more financial security via spousal benefits thanthey would have if you had claimed earlier.
For partners where one spouse outlives the other by many years, this isespecially reassuring and could be a sound plan to stretch the nest egg for thesurviving spouse.
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4. You’re still working and could face benefit reductions
Even part-time employment and side gigs add to your monthly income, and whilethis seems nice at the moment, they can affect income thresholds thattemporarily reduce benefit checks. That’s because, if you claim before FRA while stillworking and exceed certain limits, you will have some of your Social Securitybenefits withheld.
You’ll get those benefits back eventually, but by continuing to work anddelaying benefits until 70, you won’t have benefits withheld — and they’ll belarger when you do claim them at 70. It’s also possible to add more high-earningyears to the 35-year benefit calculation used to determine those delayed benefitamounts.
5. You’re focused on guaranteed, inflation‑adjusted income
Social Security benefits increase a little each year due to cost-of-livingadjustments (COLAs), so delaying boosts both the benefit base amount and thecheck’s adjustment for inflation. And while it’s true that the COLA hasn’t alwaysbeen much after Medicare premium increases, delaying benefits at leastguarantees some inflationary protections. The same can’t be said for investmentsand volatile market-based assets that don’t guarantee a baseline income level.
If you think of Social Security delays in this way, they are almost like alarger, inflation-protected annuity from the government that you’re paying forwith your payroll taxes anyway. You might as well get the most you can inreturn.
6. You’re single and worried about outliving your money
Much of today’s retirement planning advice assumes there’s a spouse tocollaborate with, but singles also need solid options for thriving in their 80sand 90s. If you may have a longer-than-average life expectancy, delaying to 70gets you increased expected lifetime benefits to support you even withoutspousal survival income.
The higher Social Security payments can reduce pressure on your savings and keepyou from running out of funds in a longer retirement.
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Bottom line
The premise is simple: Waiting until 70 increases your benefits check, and forsome, it’s a solid retirementplan for stretching out that nest egg. Signs it could work for you includegood health, other income in your 60s, a spouse who could use your survivorbenefit, and a need for guaranteed, inflation-protected income in old age.
Even better, the gap years between actual retirement and 70 can be used forstrategic Roth conversions or taxable withdrawals, provided you get the rightguidance to make it worth your while. However, the decision is personal,complex, and may be best made with the help of a financial planner. There’s noreason to guess or make costly assumptions.
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