Social Security at 70 Isn’t a No-Brainer. Here’s Where It Could Backfire.

Financial experts often describe age 70 as the “optimal” time to claim Social Security. And in many cases, waiting that long really can pay off.

If you delay your Social Security claim beyond full retirement age, your monthly benefits get to grow 8% per year until age 70 thanks to the program’s delayed retirement credits. That can lead to a significantly larger monthly check for the rest of your life.

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But that doesn’t mean waiting until 70 to file for Social Security is always the right choice. And in some cases, claiming benefits at 70 could leave you worse off financially despite that guaranteed boost.

When your health is poor

The biggest drawback to delaying Social Security is that you’re giving up years of benefits in exchange for larger monthly payments down the line. And whether you come out ahead in that situation hinges heavily on how long you end up living.

Let’s say you’re eligible for $2,400 a month in Social Security at a full retirement age of 67. A claim at age 70 boosts that benefit to $2,976.

If you live until age 90, filing for Social Security at 70 puts an extra $51,840 in your pocket on a lifetime basis. But if you only live until age 80, filing at 70 means losing out on $17,280 in lifetime Social Security income.

The problem, of course, is that no one has a crystal ball, so it’s pretty much impossible to predict how long you’ll live. But if your health is poor, know that the math on delaying Social Security may not work out in your favor on a lifetime basis. In that scenario, you may want to claim benefits on time or even early.

When you’re trying to protect your portfolio

Another issue with waiting to claim Social Security is that in the course of delaying benefits, you might cause yourself financial harm in a different way.

Let’s say you’ve retired at 67 but want to wait three more years before claiming Social Security to boost your checks. Meanwhile, the market has just crashed, and if you tap your retirement savings now, you could end up locking in serious portfolio losses.

In a situation like this, you might lose out on more portfolio income in your lifetime than what you’d lose by claiming Social Security at 67, even if you end up living until your late 80s or early 90s.

In our example above, a delayed claim made you almost $52,000 richer when you had a $2,400 monthly benefit to start with. But having to sell portfolio assets for three years during a market downturn could cost you a lot more than that.

When your choice is between filing sooner or risking costly debt

Finally, claiming Social Security at 70 may be feasible when you have steady income at your disposal until those benefits start. If that’s not the case, delaying could compromise your finances in another way.

Let’s say you lose your job at 67, have minimal savings, and don’t want to claim Social Security until 70. If you’re forced to rack up debt to cover your living expenses, the amount of money you lose to interest could well exceed the lifetime boost you get to your Social Security checks.

Even though 70 is often touted as the “best” age to claim Social Security, that doesn’t apply to all retirees. And it may not apply to you. So rather than follow that advice, think about your personal situation and what’s best for you. You may find that filing for benefits prior to age 70 makes the most sense despite losing out on the maximum boost you can get.

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