Age 70 May Not Be Your Best Bet for Claiming Social Security. Here’s Why.


When deciding on when to start receiving Social Security benefits, you have several options. You can initiate your claim as soon as you turn 62. However, you won’t be eligible for your full monthly benefit, which is calculated based on your earnings record, until you reach your full retirement age (FRA). Depending on your birth year, your FRA could be 66, 67, or somewhere in between.

Claiming Social Security before reaching FRA results in a permanent reduction of your monthly benefit, potentially causing financial difficulties during retirement. Conversely, if you postpone claiming Social Security after reaching FRA, your monthly benefit will significantly increase. Specifically, delaying each year beyond FRA, up to age 70, results in a permanent 8% increase in your monthly benefit. Once you reach 70, there’s no additional financial benefit to delaying Social Security claims. Therefore, age 70 is generally considered the maximum age to file for Social Security, although there is no obligation to start benefits at that age.

You might be tempted to wait until 70 to claim Social Security to secure the highest possible monthly benefit. However, this strategy may not be advantageous for two main reasons:

  1. Potential Loss of Lifetime Income Claiming Social Security at 70 increases your monthly benefit, but it doesn’t guarantee a higher lifetime income. If you have health issues and don’t live to an advanced age, you could significantly reduce your overall benefits.

For instance, suppose your monthly benefit at your FRA of 67 is $1,800. If you delay claiming until 70, your monthly benefit rises to $2,232. To break even for the three years of benefits you forewent, you would need to live until at least 82 1/2. At that age, your total Social Security income would be $334,800, regardless of whether you started claiming at 67 or 70.

But what if you don’t live until 82 1/2? If you were to pass away at 79, claiming Social Security at 70 could result in over $18,000 less in lifetime income compared to claiming at 67.

  1. Missing Out on Fulfilling Your Goals Perhaps you’ve always wanted to travel across Europe or South America, but work commitments prevented you. If you aim to travel or pursue similar activities that require good health during retirement, delaying Social Security might mean missing the opportunity to achieve your goals while you’re still physically capable.

Imagine planning a hiking trip through the Andes. You might be fit enough for such an adventure at 67. However, if you wait until 70 to claim Social Security and can’t afford the trip until then, declining health could prevent you from ever realizing this dream.

While there are compelling reasons to consider claiming Social Security at 70, it’s important to weigh the potential disadvantages as well. You may conclude that the benefits of a higher monthly payment do not outweigh the associated risks and downsides. The $21,756 Social Security Bonus Many Retirees Overlook

Like many Americans, you may be behind in your retirement savings. Yet, several lesser-known “Social Security secrets” could offer a substantial increase in your retirement income. For example, one simple strategy could provide you with up to an additional $21,756 annually! By learning to maximize your Social Security benefits, you could retire with the confidence and security we all seek.

Source: MSN