Delaying Social Security claims may be a good idea to increase your monthly payment amount but it may not for everyone.
Delaying Social Security may seem like a great financial move but it means missing out on a lot of payments.
If you decide on delaying Social Security to receive an increased benefit, you will need to sacrifice a significant amount of your income. Delaying Social Security may not be worth the wait if you do not live past your life expectancy or if you do not require survivor benefits.
Delaying Social Security claims beyond the age of 62 does result in an increase in benefits, but it may not be the right decision for everyone, some factors should be considered before delaying Social Security claims. It can take a long time to make up for missed income when delaying Social Security claims.
Delaying Social Security claims makes you eligible for a standard benefit of $1,600 at age 67, you can claim that amount as your full retirement age while, if you choose to claim at age of 62, your payment would be reduced to $1,120 due to early filing penalties. If you delay claiming until age 70, your payment would increase to $1,984. You would receive an additional $864 per month in retirement income.
However, during the period from age 62 to age 70, if you choose delaying Social Security claims, you may miss out on checks for a total of eight years. This means you would have passed up 96 payments, amounting to $107,520 in waived income.
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Delaying Social Security claims until the age of 70 means that you would receive larger checks, but it would take until you are around 81 years old to make up for the money you missed out on during the delay.
To actually have more overall income in your lifetime, you would need to continue living to be able to receive more Social Security payments beyond that point. Delaying your benefits claim may not be beneficial if you do not live past the average life expectancy of 76.4 years.
Waiting might result in receiving less total benefits over your lifetime, and if you rely on Social Security for retirement, you could end up working longer just to receive a higher payout in the future. It is important to carefully consider these disadvantages and potential risks before you decide on delaying Social Security claim.
Married couples who are considering delaying Social Security claims should know that it is crucial to consider survivor benefits. When one spouse passes away, the surviving spouse can continue to receive the higher of the two Social Security checks. If the higher earner claims Social Security early, their check may decrease, leading to reduced survivor benefits for their spouse.
To ensure financial security for your partner, it may be wise delaying Social Security, even if it doesn’t directly benefit you. However, before making a decision, it is important to consider your marital status and the income you are giving up.
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