Assessing the Social Security Strategy: Delaying Benefits at Retirement

Many older Americans start retirement with insufficient savings. According to the Federal Reserve, in 2022, the median retirement plan balance for seniors aged 65 to 74 was only $200,000. While stock market gains may have improved this figure since then, many retirees today still face significant financial challenges due to increased life expectancies.

Consequently, many entering retirement will heavily depend on Social Security to manage their expenses. Those lacking savings are often urged to maximize their benefits from the program.

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For many, it might seem sensible to delay claiming Social Security until age 70. While this strategy appears advantageous at first glance, there are practical considerations to keep in mind.

Understanding the Impact of Delaying Benefits

Delaying your Social Security claim beyond your full retirement age offers a higher monthly benefit for life. For individuals whose full retirement age is 67, like those born in 1960 or later, waiting until 70 can increase monthly payments by 24%. This increase can be enticing for those with limited savings.

However, delaying benefits comes with inherent risks. Although the amount you receive monthly may rise, whether this translates to a better lifetime income is uncertain. You must live long enough to recoup the monthly benefits missed during the delay.

Common advice suggests assessing your health when deciding when to claim Social Security. The idea here is that if you are in good health, waiting might yield a higher monthly benefit. A healthy individual usually has a greater chance of living long enough for delayed filers to benefit from the increased payments.

Nevertheless, even those in good health can face unexpected health issues or accidents that could shorten their lifespan. In essence, delaying Social Security is a gamble. The key question is whether that potential for a higher paycheck justifies the associated risks.

Evaluating Your Financial Needs

If you’re uncertain about whether to claim Social Security at 70, consider how crucial that additional income is for you. If you have some savings, you might opt to take Social Security at your full retirement age instead. Conversely, if you lack savings completely, your decision may be different.

For some seniors, waiting until age 70 proves to be a beneficial choice. However, you should carefully weigh the risk of receiving lower lifetime income against the potential reward of increased monthly payments. If you prefer to avoid uncertainty, filing for Social Security at your full retirement age could be the safer choice.

Uncovering Overlooked Social Security Advantages

Many Americans find themselves lagging in retirement savings. Fortunately, there are little-known “Social Security secrets” that might enhance your retirement income. For instance, utilizing a simple strategy could yield an additional $22,924 each year in benefits. Understanding how to optimize your Social Security filing can lead to greater financial stability in retirement. To learn more about maximizing your benefits, click here.

View the “Social Security secrets” »

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