Deciding when to claim Social Security benefits is a significant decision for retirees, and waiting until age 70 can offer substantial financial advantages. Here are three compelling reasons why some plan to delay claiming benefits until then.
The primary reason for waiting is financial stability without relying on Social Security. With disciplined savings, including maximizing 401(k) contributions and benefiting from employer matches, some individuals find they can comfortably retire without immediate Social Security income. Additionally, having a vested pension plan provides further financial security.
Another major factor is the guaranteed increase in benefits from delaying. Claiming Social Security at age 62 results in a reduced monthly benefit. However, waiting until full retirement age (67) increases the benefit by 43%. Delaying further until age 70 boosts the benefit by an additional 24%, equating to an 8% annual increase. This guaranteed return is particularly attractive compared to the variable returns of stock investments, especially as one nears retirement and seeks lower risk.
Longevity expectations also play a crucial role. With an average life expectancy of over 80 years for men, those in good health and with a family history of longevity may benefit more from the increased payments received by waiting until 70. This approach can be financially advantageous for those expecting to live well into their 80s or beyond.
Ultimately, while there is no universal answer for when to claim Social Security, considering financial independence, guaranteed benefit increases, and personal health can guide individuals in making an informed decision.
FingerLakes1.com is the region’s leading all-digital news publication. The company was founded in 1998 and has been keeping residents informed for more than two decades. Have a lead? Send it to news@fingerlakes1.com.