Delaying Social Security Could Cost You If You Don't Know This Number

Social Security is one of the most important benefits for seniors. Because of this, it's wise to claim Social Security at the right time.

The earliest age you can sign up for Social Security benefits is 62. However, you won't get your monthly benefits without a reduction until you reach full retirement age (FRA), which is 67 if you were born in 1960 or later.

You can also boost your monthly benefits by delaying your Social Security claim past FRA, but doing so isn't necessarily the smart move you think it is.

What happens when you delay Social Security

Delaying Social Security means automatically locking in larger monthly benefits for life. For each month you delay your claim past FRA, your Social Security benefits grow by 2/3 of 1%.

If you delay Social Security by one full year past FRA, you'll get 108% of the monthly benefit you would've gotten at FRA. If you delay your claim until age 70, which is when delayed retirement credits for waiting stop accruing, you'll get 124% of the monthly benefit you would've received at FRA.

This means that if your FRA benefit is $2,000 a month and your FRA is 67, filing at 68 gives you $2,160 a month instead. If you file at 70, you can boost that $2,000 monthly check to $2,480.

Why the experts often recommend waiting

A big reason some experts recommend delaying Social Security until age 70 is that those benefits may be your only guaranteed source of income in retirement. Even if you have savings and investments, that money could eventually run out. 

But once you start collecting Social Security, you can bank on getting a monthly check. So it's good to have larger checks for added financial protection.

Social Security benefits are also protected from rising costs. Each year, benefits are eligible for a cost-of-living adjustment that's tied to inflation. So the larger your benefits are to begin with, the more valuable those annual adjustments can be.

A shorter life expectancy changes the equation

While it's true that delaying Social Security past FRA increases your benefits on a monthly basis, it's not guaranteed to give you more lifetime income. And if you don't expect to live a very long life, then it could pay to claim Social Security on time or even early.

If you're eligible for $2,000 a month in Social Security at age 67, by age 82 and 1/2, you'll break even with a total of $372,000, whether you start getting benefits at 67 or whether you wait until 70. And if you live past age 82 and 1/2, you'll end up with more lifetime income by delaying your Social Security claim until 70.

But if your health is in poor shape and you don't think you're likely to live until or past your early 80s, then it may not make sense to force yourself to wait until age 70 to start getting benefits. You could end up with more money by filing earlier. And that might also make it possible to retire earlier, giving you more retirement years to enjoy without the constraints of a job.

A delayed filing doesn't always make sense

Delaying Social Security often makes sense when you don't have a lot of money saved for retirement and expect to get the bulk of your senior income from those monthly benefits. It can also make sense when you have a spouse you're trying to protect financially, because if you're the higher earner in your household and pass away first, a delayed claim could leave your spouse with larger survivor benefits.

But don't assume off the bat that delaying Social Security makes sense for you. The only way to know that is to figure out your breakeven age. From there, you can do an honest assessment of your health and family history to see if it makes sense to wait on benefits versus claiming them sooner.

And even if you have confidence you'll live a pretty long life, that still doesn't guarantee that claiming Social Security at 70 or beyond FRA is the best choice for you. It may be that you have a lot of money you worked hard to save. If so, filing for benefits earlier could make it possible to exit the workforce at a younger age and enjoy a few more good years of retirement before your health eventually does start to decline.

Bottom line

Once you stop working, there's a strong chance your Social Security benefits will play a big role in your retirement plan. So it's important to file at the right time. But that doesn't necessarily mean delaying your claim past FRA or waiting all the way until you turn 70 to file for benefits.

In some cases, filing earlier could put more money from Social Security in your pocket in your lifetime. So it's important to be realistic about your health and life expectancy and take those factors into account in the course of making your decision.

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Author Details

Maurie Backman

Most retirees will make their Social Security claiming decision exactly once, which is why Maurie Backman has spent more than 20 years helping them understand it. She covers benefit calculations, COLA forecasts, and the policy changes that quietly reshape what retirees receive each month. Her work has appeared in Kiplinger, The Motley Fool, 24/7 Wall St., Bankrate, and U.S. News & World Report.