Key Points
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At 70, you score the highest possible Social Security benefit based on your earnings history.
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While larger monthly checks might give you peace of mind and larger COLAs, they won’t necessarily result in more lifetime income.
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You might also miss out on the opportunity to enjoy the money when you’re younger.
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When it comes to planning your retirement, there are certain tough choices you might have to make, like deciding which account to withdraw from first and how to manage taxes. You’ll also need to figure out when to claim Social Security. And that’s probably a more loaded decision than you think it is.
Once you turn 62, you can sign up for Social Security at any time. The monthly benefit you’re eligible for in retirement is based on your personal wage history. And it’s available to you without a reduction at full retirement age, which is 67 if you were born in 1960 or later.
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You can also delay Social Security past full retirement age to boost your checks. Each year you hold off on results in a permanent 8% increase until you turn 70. For this reason, 70 is often referred to as the latest age to claim Social Security.
You might assume that taking benefits at 70 is the smartest move. But while it’s a decision that could work out well, that’s not a given.
The upside of claiming Social Security at 70
Filing for Social Security at 70 means locking in larger checks. That could result in a lot more peace of mind during your retirement.
If the market tanks and it’s a bad time to tap your savings, having larger Social Security benefits should make it easier to leave your portfolio alone to ride out a downturn. Plus, Social Security benefits are eligible for a cost-of-living adjustment (COLA) each year. The larger your benefits, the more money each annual increase should put in your pocket.
The downside of taking benefits at 70
While there are clear advantages to collecting larger Social Security checks each month, one potential downside of filing at 70 is shorting yourself on lifetime income. That’s a drawback to take seriously.
Claiming Social Security at 70 might work out very well if you end up living a long life. If you don’t, you could end up with a smaller lifetime benefit despite boosting your checks monthly.
A $2,500 benefit at 67, for example, grows to be worth $3,100 at 70. But you need to live until age 82 and a half to break even — meaning, to collect the same total regardless of filing at 67 versus 70. This means that if you don’t live at least that long, filing a claim at 70 hurts you financially.
In this example, if you delay your Social Security claim until 70 but only live until age 80, you’ll end up with a total of $372,000 in benefits, versus $390,000 for filing at 67. That’s an $18,000 difference.
Plus, claiming Social Security at 70 could mean missing out on opportunities to enjoy that money at a younger age, when your health might be better. If travel is a big part of your retirement plan, for example, forcing yourself to wait could mean having to cancel or alter certain experiences.
Or maybe not. The reality is that you may be in just as good shape at 70 as you are at 67 or even 62. And you may end up living to age 100, which would result in much more lifetime Social Security income when you file at 70 than if you file at a younger age. The question you need to ask yourself, therefore, is whether you’re willing to take the chance.
Remember, you won’t have a crystal ball to look into when you’re forced to make your decision. So before you delay your claim, decide whether the promise of larger checks is worth these pitfalls.
You may conclude that filing for Social Security at 70 isn’t automatically the best choice and that taking benefits earlier makes more sense given your health, life expectancy, and personal goals.
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