Is it Prudent to Wait Until 70 to Claim Social Security Benefits? Let’s Look at the Statistics

It is rational to wait until age 70 to receive Social Security benefits; your monthly payments would be 35% greater than what would have been at age 66, the typical retirement age for Americans. Those who wait to file for benefits might get hundreds of dollars more each month than those who file early.

According to figures from the Social Security Administration, just 5% of men and 8% of women wait until 70 to retire. About half of Americans begin receiving Social Security benefits before the full retirement age, typically because they cannot afford to wait. Over a quarter of males and slightly under a third of women begin receiving Social Security benefits at age 62.

Putting up a fight for as long as possible is the logical thing to do. But is it wise to put off collecting Social Security until age 70? Read on.

The Benefits of Being Patient

Let’s say you start collecting your Social Security benefits in January 2022 at 62 after consistently earning the necessary amount throughout your career. According to the Social Security Administration, your monthly retirement payout will be $2,364. (SSA).

If you decide to put off collecting benefits until you’re 67 years old, you will receive a $3,568 raise on your regular paycheck. But if you wait until you’re 70 before applying for Social Security, you’ll get a stunning $4,194 monthly.

The preschoolers got twice as many marshmallows for the same wait time, so this offer is manageable. Delaying the time you start receiving Social Security retirement benefits is a smart move financially.

If you delay receiving your Social Security payments until you are 67 rather than 62, your monthly payment will increase by roughly 51 percent. In comparison to starting benefits at age 67, your monthly check will be over 17.5% greater if you wait until age 70 to do so.

Is there any evidence that waiting is beneficial?

Is it prudent to put off receiving Social Security benefits until age 70? Yes, your monthly payment will increase if you wait. But, to be sure, you should consider the long-term gains.

The above case study compares the total Social Security payment received by someone who started receiving benefits at ages 62, 67, and 70. You’ll need to remember that the maximum Social Security benefit levels we discussed earlier are used in the computations.

The total benefits for collecting at age 67 will be higher than those starting to collect at age 62 at age 76. Likewise, claiming at age 70 will result in more total benefits than claiming at age 67 by the time you’re 87.

Here we go with what many would consider the most crucial data. Men in the United States have a median life expectancy of 75 years. It’s 81 for females. So the data suggests that many Americans will not see a financial benefit from delaying their Social Security benefits beyond age 70.

But there’s more to the story than meets the eye. Life expectancy at age 65 in the United States is 19.1 years for men and 21.7 years for women. Consequently, the decision-making process will shift.

Yet, we still need to take inflation into account. At age 67, you can start collecting Social Security payments even if you have no intention of using them. The money can then be invested in something safe, like Treasury bonds. Doing this, the amount of time it would take to justify waiting to apply for benefits would increase.

Bottom Line

Does it matter if you wait to start receiving Social Security benefits, as this data suggests? The odds of living past the typical lifespan are in your favor. Delaying your Social Security benefits claim could result in a much larger payout than if you had started collecting earlier. Make good decisions for now and the future.

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Bio:
Todd Carmack grew up in Dubuque, Iowa, where he learned the concepts of hard work and the value of a dollar. Todd spent years in Boy Scouts and achieved the honor of Eagle Scout. Todd graduated from Iowa State University, moved to Chicago, spent a few years managing restaurants, and started working in financial services and insurance, helping families prepare for the high cost of college for their children. After spending years in the insurance industry, Todd moved to Arizona and started working with Federal Employees, offing education and options on their benefits. Becoming a Financial Advisor / Fiduciary can help people properly plan for the future. Todd also enjoys cooking and traveling in his free time.

Disclosure:
Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice has been filed, or is excluded from notice filing requirements. This information is not a complete analysis of the topic(s) discussed, is general in nature, and is not personalized investment advice. Nothing in this article is intended to be investment advice. There are risks involved with investing which may include (but are not limited to) market fluctuations and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making any investment decision. You should consult a professional tax or investment advisor regarding tax and investment implications before taking any investment actions or implementing any investment strategies.