Should You Really Wait Until 70 to Collect Social Security?

Deciding when to collect Social Security depends on your unique circumstances. There is no standard age that works for everyone. Experts will tell you to delay Social Security for as long as possible, but is that right for you? Let’s find out.

What Are My Options?

When collecting Social Security, you have three main options to choose from:

1. Collect early at 62

2. Collect at Full Retirement Age (FRA)

3. Collect at age 70

The SSA sets the full retirement age, and it depends on your birth year. For example, if you were born in 1958, your full retirement age is 66 years and eight months, while if you were born in 1960, your full retirement age is 67. The concept of delayed gratification and collecting social security goes hand in hand. The longer you wait, the larger the benefits. The answer is clear: you should wait until 70 to collect Social Security, right? Not quite. Again, this is a personal decision based on your individual circumstances. Before deciding, consider your current health status, retirement savings, longevity, and retirement lifestyle. Ultimately, you don’t know how long you’ll live, but considering longevity will help determine the best time to start collecting benefits.

Collecting at 62

Anyone can collect at 62 unless you’re collecting survivor or disability benefits. After contributing to the system for most of your life, taking the money without giving it a second thought can be tempting. But be warned, collecting early causes a permanent reduction in your benefits, sometimes up to 30%. 30% fewer benefits can impact your retirement lifestyle more than you think. As of February 2023, the average Social Security check is nearly $1,700. So, taking that into account, if you wait until your FRA to collect, you will receive the full $1,700 check. However, if you start collecting benefits at 62, you will only receive $1,190. Imagine what you could do with an extra $510 per month in retirement…If you decide to collect early at 62 and still work, stay within the earnings limit of $21,240. If you do earn over that limit, the SSA deducts $1 in benefits for every two dollars you earn over the limit. If you don’t need the income from social security to pay your bills, it’s best to wait to start collecting so you can avoid a permanent penalty.

When Filing at 62 Makes Sense.

Filing at age 62 can make a lot of sense if you have been diagnosed with a medical condition that will severely reduce your life expectancy. Also, if you’re married, no longer working, or working but under the income limits, and you have a lower benefit than your spouse, filing at age 62 may be the best option for you. The lower benefit will be lost upon the first death (as the survivor only receives the larger of the two benefits), so the goal is to collect it as long as possible before it’s lost. While doing this, having the higher-earner spouse wait as long as possible to collect the survivor benefit is preferable.

Collecting at FRA

FRA is when you can receive full social security benefits or primary insurance amount (PIA). You can see what your PIA will look like by creating a My Social Security account. Collecting at FRA has no harm on the number of benefits you earn, so if you need the income at this age, feel free to start collecting! Unlike collecting at 62, you can work after FRA with no earnings limit, so your Social Security benefits won’t be affected whether you make $10,000 or $40,000.

Collecting at 70

Those who can hold out collecting until age 70 will receive delayed retirement credits. These credits are a ‘reward’ from the Social Security Administration for putting off claiming your Social Security. Every year you wait past FRA, your benefit will increase by 8%. However, once you reach the age of 70, these delayed credits stop, so there’s no further reason to wait to collect in terms of qualifying for increased benefits. You can file for Social Security after 70, but it won’t increase your monthly benefit. Collecting at 70 is a great way to maximize your social security benefits. It is a good option for retirees with a steady cash-flow plan and minimal health or financial concerns. 

A Few Other Things to Consider

Before you decide, there are a few other factors to consider. 

• Marital status: If you're married, spousal benefits work differently because a spouse is eligible for up to 50% of the primary earner's benefit if collected at full retirement age. You can take 100% of your retirement benefits instead if it’s higher.

• Divorcee: If you’re divorced but were married for ten years or more, you can still receive up to 50% of benefits based on your ex-spouse’s Social Security record.

• Widower's benefits: If you’re widowed, you can receive your retirement benefits or up to 100% of your spouse’s—whichever is higher.

• Employment status: If you work into your 60s, the IRA could take a portion of your benefits if you exceed the 2023 limit of $21,240.

How Do I Decide? 

To wait or not to wait, that is the question! Work with us to determine the best plan for you and your financial goals. Together, we will be able to assess the state of your retirement savings, future employment, and how your spouse’s income can affect your decision. Most people want to retire as soon as possible, but you must consider the financial ramifications of collecting early and if that fits into your retirement plan. Get in touch with our team to learn more.