The Best Reason to Take Social Security Long Before 70

My Comments: My history as a retirement planner goes back to the late 1970’s. My history as a socialist goes back to 2006 when I signed up to receive my first check from Social Security.

I don’t know how old you are now or what your opinion is of our Social Security Administration (SSA). What I do know is that without the monthly benefits coming from the SSA, millions of Americans would starve to death.

Since it’s almost universal for every soon-to-be-retired American, knowing when to sign up is important. The problem is there are about 96 calendar months to choose from at a minimum so which one is best for you?

Read this article and if you’re still confused, follow this webpage down to the right and find the Select Category button. Scroll down to Social Security and you’ll find there are currently 172 choices. This one is #172, leaving you with only 171 to explore and come to terms with what is one of the most critical financial steps you’ll take to get you through the end of your life. And maybe that of a surviving spouse.

by Kailey Hagen \ 15 DEC 2021 \

By the time you sign up for Social Security, you’ve spent decades paying into the program. It’s only natural that you’d want to get the most out of it. You may have heard that delaying benefits until 70 is the best way to do that because you’ll get larger checks. There is some truth in that, but it’s not the wisest option for everyone.

Here’s a closer look at how your age affects your benefits and when you might be better off signing up much earlier.

Why delay until 70?

You become eligible for Social Security at 62, so the idea of putting off your benefits might seem strange to some. Why would you want to miss out on years of guaranteed income? The answer has to do with how your benefits are calculated.

The Social Security Administration assigns everyone a full retirement age (FRA) based on their birth year. For today’s workers, it’s between 66 and 67. You have to wait until then to sign up for benefits if you want the standard amount you’ve earned based on your work history.

Signing up early is an option but doing so shrinks your benefits. Those with an FRA of 67 who sign up at 62 only get 70% of their standard benefit per check, while those with an FRA of 66 only get 75% per check for signing up right away. 

On the other hand, those who delay benefits see their checks grow a little bit every month until they reach 70. Then, they qualify for their maximum benefit. That’s 124% of your standard benefit per check if your FRA is 67 or 132% per check if your FRA is 66.

To put this in perspective, let’s say you qualify for the average benefit of $1,563 per month at your FRA of 67. If you sign up at 62, you’d only get $1,094 per month, but if you waited until 70 to sign up, you’d get $1,938 per month.

Why wouldn’t you want to delay until 70?

Now that you understand the benefit of delaying, it can seem like the obvious choice. You’re sacrificing a few years of benefits at first for much larger benefits going forward. For most seniors who live into their 80s or beyond, delaying benefits is often the more lucrative option. In some cases, it helps them get $50,000 or more out of the program compared to signing up right away.

But there’s a big if there. Those who don’t make it into their 80s are usually better off signing up for Social Security much sooner. 

To prove this, here’s a table showing how much you’d get from Social Security at various starting ages if you qualified for the average $1,563 benefit at your FRA of 67. That means you’d get a benefit of $1,094 per month by starting at 62 and a benefit of $1,938 by delaying until 70. The figures below show how much you’d have received from the program overall by the end of each year.

(Note: There’s an extensive chart in the article as prepared by the author. Rather than try to replicate it here, I encourage you to go up this page and click on the link to the article itself. It supports the arguments made by Ms. Hagen below.)

As the table above illustrates, claiming at 62 will give you the largest benefit if you believe you’ll die before 78. But beyond that point, delaying benefits leads to more money overall. For those planning to delay until 70, you’d have to be pretty confident that you’d live until at least 82 for this to be worthwhile.

The problem is you can never be sure how long you’ll live. So, you just have to take your best guess. Some people prefer to hedge their bets by signing up somewhere in the middle, like their FRA. This is another option if you want to enjoy some of the benefits of delaying without waiting until you’re 70.

It’s best to come up with some sort of plan for when you’re going to claim Social Security, even if you’re decades away from doing so. Create a my Social Security account to get a personalized estimate of how much you can expect from the program. Then, make a table like the one above to figure out which starting age will give you the most money.

Knowing how much you can expect from the program will help you figure out how much you need to save on your own for retirement. Your plans for retirement or Social Security might change over time, but you can make alterations over time to help keep yourself on track. That way, when it comes time to retire, you won’t run into any unpleasant surprises.

2 thoughts on “The Best Reason to Take Social Security Long Before 70

  1. Tony B

    Everyone saves for retirement, and no one knows how to distribute assets IN retirement. The decision WHEN to take social security is really important. Remember, it’s taxed differently. However, research from Dr. Bill Reichenstein tells us you can quantify this decision in combination with other factors (ie, small, targeted Roth conversions and such). It’s all about tax brackets and Part B thresholds.
    Don’t go it alone, find a financial advisor who is familiar with Dr. Bill’s work….better yet, uses his INcome Solver software.


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