Social Security at 70: Is it Worth the Wait

The traditional advice for Social Security claiming is to wait until age 70 to maximize benefits. Delayed retirement credits increase monthly Social Security checks by 8% for every year an individual waits past their full retirement age, up to the age of 70. A 2019 study by United Income confirmed that most retirees would indeed maximize their benefits by waiting until 70.

However, there are also potential disadvantages to this approach. While the chances are high that waiting until 70 will maximize benefits, there’s still a significant risk that it won’t. According to the same study, only 57% of retirees would make the best decision by waiting until 70, leaving a 43% chance that this might not be the right choice.

The main factor determining whether waiting until 70 is a wise decision is life expectancy. If health conditions suggest a lower-than-average life expectancy, claiming benefits earlier than 70 could result in more money to manage health issues and potentially a higher lifetime benefit due to a shorter lifespan.

Another consideration is the impact on spousal benefits. Social Security allows spouses to claim benefits based on their partner’s earnings record. However, the spouse must be receiving their own benefit. The maximum spouse benefit is at full retirement age, so if one waits to claim until 70, and their spouse is already at full retirement age, they may receive a smaller benefit than they could have if the claim was made earlier.

Additionally, Medicare costs must be considered. Many retirees automatically enroll in Medicare at 65 because they’re already collecting Social Security. But if benefits are delayed, enrollment must be done manually, and Medicare Part B premiums must be paid out of pocket. For 2024, these premiums will cost $174.70 per month, with higher costs for those with higher incomes.

The decision to delay Social Security until age 70 is not a one-size-fits-all solution. Making this decision requires careful consideration of personal health, spousal implications, and financial preparedness for Medicare costs. Therefore, it’s crucial for individuals to thoroughly evaluate their unique circumstances and consult with a financial advisor to make the most informed decision about when to claim Social Security benefits.