Delay Social Security Till Age 70? Not In The Real World

For the past several years, you’ve been flooded with advice about waiting until age 70 to begin claiming Social Security retirement benefits. Writing such stories, often more than once, has become a staple of my trade.

But how realistic is it to delay that long? If you're thinking there's no way you can wait much past 62, the earliest age you can claim, you've got lots of company—and there's actually some math on your side.

First, though, let's agree there's a reward to waiting: Benefits at 70 are 76% higher than if begun at the earliest claiming age of 62.

Now for the drawbacks. For starters, you could die before 70 and receive no benefits at all—although if you are in good health, the odds of this happening are small.

But even if you live a normal lifespan, you may not come out ahead if you delay. To see if waiting might make sense, go to the Social Security estimator to compare the benefits you would receive at different claiming ages. Add up the income you would receive by claiming early, then compare it with claiming later. That way, you can calculate how long it would take your benefits at age 70 to equal what you would get by taking a smaller benefit at age 62. The point where taking benefits early or late work out the same is your break-even age.

Related: When can you start collecting Social Security benefits?

But it can be a mistake to focus just on that point. Sure, if the average 62-year-old man can expect to live to 82, and if your break-even age falls beyond that, you might think there's no reason to delay benefits. But Social Security is also insurance against living longer than you expect. Personally, I will wait because I want my money (and me) to last until I turn 100.

You can also consider the strategy of claiming at 62, investing the benefits left over after paying income taxes, and watch them grow to a nest egg at 70 that is larger than you would have if you had delayed claiming your benefit. Of course, I have never actually met or even heard of someone who actually did this.

Why not? Because that’s not how real life works. And, for exactly the same reason, it’s why so few people actually wait until 70 to begin claiming Social Security. According to the latest Social Security data, only 1.1% men claimed benefits at age 70 or above; among women, the figure was 1.7%.

Whatever led these few people to delay claiming, it's clear than that waiting until 70 is a strategy that does not make sense to the vast majority, despite how sound it may appear to relatively well-paid journalists who expect to live until they’re 117.

More to the point, there are some very good reasons NOT to wait to claim benefits, including the simple fact that you need the income to pay your bills. Here are a few more:

• Spousal benefits do not increase if delayed past what Social Security calls “full retirement age,” which is 66 for people now nearing retirement.
• Ditto for widow or widower benefits. In fact, there may be good reasons to take these benefits even sooner. The earliest age at which most people can take these benefits is not 62, as with retirement benefits, but 60. Taking them that early will reduce them but you might still come out ahead by doing so rather than waiting.
• Disability benefits at age 62 are as high as if you were 66, so there's no reason to wait. And you could be eligible for them as young as your 20s, in which case delay is nonsensical.
• Disabled people whose spouses die can take widow or widower benefits as early as age 50, and they will be as large as if they waited until age 60. Yes, they will be reduced compared with waiting until 66. But 16 years of reduced benefits is a deal likely worth taking.
• Children who are disabled may be able to collect survivor benefits based on their parents’ Social Security earnings records for the rest of their lives.
• For those who are divorced, if you get remarried before turning 60, you will permanently give up survivor benefits from your former spouse. If you wait until 60 to remarry, you will keep the benefit.

What are your Social Security questions? Send them to me and I’ll answer as many as I can in future posts.

Philip Moeller is an expert on retirement, aging and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.