Planning to Claim Social Security at 70? It May Not Work Out

The decision to delay Social Security isn’t an easy one. After all, it’s hard to sit tight and wait for a large amount of money you know you’re entitled to get. But if you hold off on claiming Social Security until age 70, you’ll be rewarded in a very big way.

The earliest age you can claim Social Security is 62, albeit at a reduced rate. And you’re entitled to your full monthly benefit based on your earnings history when you reach full retirement age (FRA), which is either 66, 67, or somewhere in between, depending on when you were born.

For each month you delay benefits past FRA, they increase by two-thirds of 1%. Hold off on signing up for Social Security until age 70, and you’ll score a 24% to 32% boost in total, depending on your FRA.

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It’s a good idea to wait to claim Social Security if you think you’ll be heavily reliant on those benefits to pay your bills as a senior. And if you’re admittedly not doing the best job of funding an IRA or 401(k) plan, that may very well be the case. But while it’s a smart strategy to plan on filing for benefits at age 70, it’s also an option that may not ultimately work out.

When the best-laid plans go awry

A big reason seniors are able to delay their Social Security benefits until age 70 is that they have another income source to access in the interim — namely, a paycheck from work. But if you’re forced to retire earlier than age 70, then you may have no choice but to file for Social Security at a younger age.

Say your plan is to work until the age of 70 and claim benefits then — only come age 65, health issues force you to scale back to part-time work. At that point, you may have to file for benefits to stay afloat financially.

Similarly, your company might fold when you’re in your early 60s, and you might struggle to get a comparable job later in life. If that situation forces you to drop out of the workforce or become underemployed, then you may not be able to wait to claim Social Security.

That’s why you shouldn’t necessarily bank on being able to file for benefits at 70 — even if you’d like to go that route. Instead, you may want to tell yourself you’ll have to file at an earlier age and plan around that. That could mean making spending changes as you get older. Or, it could mean prioritizing your IRA or 401(k) so you have a more robust nest egg to fall back on in case your Social Security benefits wind up being less generous than you’d like them to be.

Of course, your plan to file for Social Security at age 70 may work out in the end. And if so, you’ll have a higher monthly benefit to look forward to for life. But it’s a good idea to remind yourself that your plan may not come to fruition — and figure out how to compensate for a lower benefit sooner rather than later.

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