Many people believe that to get the most out of Social Security benefits, they should wait until age 70 to apply. This is because claiming at that age stops the accrual of delayed retirement credits, which increase monthly payments for each month the individual postpones their claim. As a result, a person could receive a check that is about 77% larger than if they claimed benefits at age 62.

However, delaying benefits until age 70 may not be the best choice for everyone. Several factors, such as personal retirement savings and overall household income, must be taken into account. Let’s explore the considerations surrounding claiming Social Security at age 70.

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Claiming Earlier May Be More Beneficial

The common belief around waiting until age 70 is that the increase in monthly benefits will compensate for the years of missed payments. This approach assumes individuals will live long enough to benefit from the higher payments. Yet, this is not guaranteed for everyone.

Research indicates that waiting until 70 isn’t uniformly the best strategy for maximizing retirement wealth. A 2019 study from United Income found that only 57% of seniors would benefit most from waiting until this age. Life expectancy statistics from the Centers for Disease Control suggest that individuals in their 60s typically live just long enough for age 70 to be the ideal time for claiming benefits. This means there is only a slightly better than 50% probability that age 70 is the optimal claiming age for you personally.

Considering your health and family history can guide your decision. If you are in good health and have relatives who lived into their late 80s or 90s, waiting may be advantageous. Conversely, if you face health challenges or have a history of early mortality in your family, claiming earlier could be wiser.

Your personal information is a valuable asset when deciding when to claim Social Security. Use it to your advantage.

Potential Dependency on Retirement Savings

One significant risk to retirement savings is the sequence of return risk. This risk refers to the possibility that a portfolio could experience weak returns in its early years. As you withdraw from your savings for daily expenses, your portfolio balance diminishes. This depletion could prevent you from enjoying strong investment performance in later years when the market picks up.

The sequence of return risk is heightened if you delay claiming Social Security until age 70 and plan to withdraw heavily during that time. Although you could reduce your withdrawal amount significantly after starting to collect benefits, it might be too late to recover your investments sufficiently. The outcome could be a reduced overall wealth.

To mitigate this risk, consider adjusting your withdrawal strategy. You might lower your withdrawals by cutting back on non-essential expenses or revising your withdrawal plan during years of poor market performance. Increasing your cash reserves could also help offset declines from riskier assets. Addressing this risk is possible, but it does come with trade-offs.

Impact on Household Income

The question of when to claim Social Security becomes more complex when factoring in spousal benefits or how one spouse’s claiming may affect the other’s benefits.

Spousal benefits can amount to as much as half of the primary beneficiary’s amount at full retirement age, which is 67 for those born in 1960 or later. However, there is a significant caveat: both spouses must claim benefits for the lower-earning spouse to receive their spousal benefits. Alternatively, the lower-earning spouse can still receive their own retirement benefit until the higher-earning spouse applies.

This dynamic often suggests that neither spouse should wait until age 70 to claim benefits; at least one should likely claim earlier.

On the flip side, survivor benefits could represent as much as the amount the deceased individual was receiving prior to passing away. This makes waiting until 70 more appealing, as it could provide the surviving spouse with a higher monthly benefit.

Your approach will depend heavily on your unique situation. Consulting with a financial professional may help clarify the optimal claiming strategy for you. Ultimately, the choice to claim benefits at age 70 is not a straightforward decision for many individuals.

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