For many Americans, Social Security is an important source of income during retirement. However, the amount you get from Social Security can vary based on how much you earned while working and when you choose to start receiving benefits.
Why Waiting Until Age 70 Is Important
You can start collecting Social Security as early as age 62. But if you do, your monthly payments will be permanently reduced—sometimes by as much as 30%. The official “full retirement age” is 67 for those born in 1960 or later.
If you wait past this age, your benefits increase. In fact, for each year you delay receiving Social Security after your full retirement age, your monthly payment goes up by about 8%.
For example, if you qualify for $2,000 per month at age 62 and wait until you’re 70, you could receive about $3,543 per month. That’s more than $1,500 extra each month! This doesn’t include cost-of-living adjustments, so you might even get more.
According to research from the National Bureau of Economic Research, over 90% of Americans could get their biggest lifetime benefit by waiting until age 70. But in reality, only around 10% actually do this.
Why Most People Don’t Wait
Although waiting pays off, many retirees start Social Security early. Why? Many people simply can’t afford to wait. They need the money right away to cover living expenses, especially if they don’t have enough savings or aren’t working anymore.
Other people worry about health issues or don’t expect to live long enough to benefit from waiting. Starting benefits earlier can also ensure their spouse gets some income, but it may leave the spouse with smaller survivor benefits.
Even Waiting a Little Bit Helps
If you can’t wait until 70, even postponing Social Security by a year or two after your full retirement age can make a noticeable difference in your monthly payment.
Working a bit longer or saving more aggressively during your 60s can help you wait to claim benefits later.
The Extra Bonus
Many retirees don’t realize how much more money they can receive just by claiming Social Security later. Some experts say this simple decision could pay you thousands more each year.
Delaying until age 70 is the most effective way to guarantee a higher income during retirement. If you’re able to wait, you may enjoy more financial security for years to come.
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