Delaying Social Security

You can apply to receive your Social Security benefits any time between the ages of 62 and 70. However, if you choose to delay the start of Social Security, your monthly benefit will be larger.

Every retirement plan is unique. Your needs and strategies may vary, and your circumstances might require you to apply for Social Security early. But it’s important to note that there are advantages and disadvantages when it comes to taking out or delaying your Social Security benefits. Understanding these factors can help you make an informed decision about when to initiate your Social Security benefits.

The main advantage of delaying your Social Security benefit is to make it larger. Although you can claim as early as the age of 62, your benefit will be reduced by as much as 30% if you claim before your full retirement age (somewhere between 66 and 67 for most people). Essentially, the earlier you claim your monthly benefit, the smaller it will be. You will also be locked into that rate going forward. However, your benefit increases by a small percentage for every month you delay taking your benefit past your full retirement age up to age 70.

According to Social Security Administration (SSA), in 2023, the maximum benefit for workers with steady earnings is $2,572 for a 62-year-old recipient, but $4,555 for a 70-year-old. That’s a substantial difference that can greatly impact your retirement finances.

Taxes are another reason to delay your Social Security. You may have to pay taxes on your Social Security benefits if you have additional income, such as any employment earnings or dividends. If you file as an individual and your combined income is between $25,000-$34,000, you may pay income tax on 50% of your benefit. Should your combined earnings be over $34,000, that percentage jumps to 85%. Since many people are still working at 62, it can be easy to cross over that line.

In addition, delaying Social Security can help protect against inflation. For every year you delay starting your benefit after your full retirement age, your benefit is given a delayed retirement credit of 8%. Coupled with the regular cost of living adjustments (COLA), that increase can keep your benefit from being nibbled away by inflation. In addition, the percentage increase in your benefits can give you more purchasing power.

Delaying Social Security can also increase spousal benefits. Spouses may be eligible for a benefit based on their spouse’s earnings, for up to half of the amount the worker would receive at full retirement age. However, if you claim your benefit before full retirement age, the spousal benefit is also reduced.

The biggest drawback to delaying your social security is life expectancy. Not knowing how long you have to enjoy your retirement can make delaying your Social Security a gamble. The average life expectancy for Americans is 76.4 years, but there’s a difference between genders. For women, life expectancy is 79.3 years — for men, it’s 73.5 years. You pay into Social Security your whole working life; you deserve to reap the benefits in your retirement.

Delaying Social Security can affect your financial stability and chances. Social Security is not designed to be your , but it should supplement your lifestyle. Delaying that extra income might mean you miss an investment opportunity, which could lead to more restrictive choices down the road.

Recently there has been some concern that Social Security policies and funding are not sufficient for future needs. Although both Social Security and Medicare are fully funded through 2034, according to a 2023 report by the SSA Trustees, Social Security benefits could be reduced to 77% after 2033 if Congress does not enact further funding. Retirement can last a long time; you don’t want to see your benefit decreased when you need it most.

You must complete an application through the SSA to start receiving Social Security, so delaying is easy: simply don’t apply until you want to begin receiving it. You can apply up to four months before the month you want your benefits to start.

Your decision to delay or apply for Social Security should be part of your overall retirement planning strategy. The SSA has a quick calculator that shows you how much you’ll receive at different ages. This can help you decide your optimal timing for enacting your benefit (note: this is an estimate, not your actual benefit). Once you know when you want to start receiving your monthly benefit, remember to apply four months before the month you want to begin receiving your benefit to give time for processing the application.

Deciding when to start your Social Security is a significant step in your overall retirement financial plan. Don’t hesitate to discuss all the options with a trusted financial professional who can advise you on the best choice for your personal circumstances.

Editor Malori Malone contributed to this article.