You can start your Social Security benefits at 62. But, most people shouldn’t do that. In fact, delaying until age 70 may be the smartest choice for many retirees.
Here are a few key reasons why waiting to start getting Social Security checks could be the best move.
1. To maximize your monthly income
Having extra income as a retiree can come in handy to help you cover expenses such as healthcare. And waiting until 70 is a good way to end up with more money coming in each month. That’s because while retirees can first start their benefits at 62, the amount they’ll get goes up each year.
Every retiree has a “primary insurance amount,” which is a standard benefit they become entitled to at their full retirement age, or FRA, which is between 66 and four months and age 67 and determined based on when you were born. Retirees’ standard benefit shrinks due to early filing penalties for those claiming it prior to FRA and grows due to delayed retirement credits for those who wait until after FRA to get their first checks.
Delayed retirement credits can be earned until 70 and are worth two-thirds of 1% per month for each month a senior puts off filing for benefits. Each full year of delay results in an 8% benefits bump compared to the amount available at FRA. So with a standard benefit of $1,500 and an FRA of 67, it would be possible to increase monthly Social Security by as much as $360 per month. That’s a lot of extra money to enjoy later in life.
2. To take care of a lower-earning spouse after you’re gone
Making sure your spouse doesn’t experience serious financial hardship after your death is definitely a worthy goal. And waiting until 70 to start Social Security checks is one way to do that if you were the higher earner in your marriage.
When one spouse passes away, the other gets to keep the higher of their two benefits. If your spouse’s benefit was lower than yours (which happens if you earned more), they’ll get to keep getting your Social Security checks. If you raised your $1,500 benefit to $1,860 by waiting until 70 to start it instead of claiming it at FRA, your spouse would have $360 more per month. If you’d shrunk your benefit with an early claim, on the other hand, they’d find themselves with a smaller monthly income.
This extra cash can make a huge difference. It may be desperately needed when your surviving spouse has to cope with just one Social Security check coming into your household instead of the two that came before your death.
3. To up your odds of getting the most lifetime benefits
Since you pay into Social Security throughout your working life, it’s natural to want to try to get every dollar you can out of the program. Waiting until 70 increases the odds you’ll end up with more lifetime benefits, so it makes sense to put off getting your first check if you can.
Recent studies revealed your odds of ending up with more lifetime Social Security income are higher if you delay claiming. Specifically, just 6.5% of people who start getting checks before turning 64 end up with more lifetime benefits, while 57% of people who delay until 70 find themselves with more total benefits.
There’s a simple reason you have better odds of ending up with more money if you wait. Social Security was designed to equalize out lifetime benefits regardless of claiming age, with early filers getting more small checks and late filers getting fewer large ones. But the formula of early filing penalties and late retirement credits was based on life expectancy at the time of the program’s design, and it hasn’t changed despite life expectancies getting longer since then.
As a result, more people than in the past end up living long enough to get so many higher checks, their lifetime benefits more than make up for income they passed up by putting off receiving them for years.
So if you want to have the best chance of more lifetime benefits, end up with more money to live on later, and make sure your spouse is provided for after you pass, waiting to start checks until 70 may just be the best move for you.
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