When it comes to retirement, maximizing your Social Security benefits is crucial, especially when it represents the majority of your income. Millions of retired seniors rely on Social Security as their primary source of income, so every extra dollar counts. There’s a little-known strategy that can significantly increase your monthly checks by $1,033, just by delaying your claim until a certain age.
Increase
The average Social Security benefit for retired workers stood at $1,913.31 as of March 2024. While you can claim your benefits as early as age 62, doing so could reduce your monthly checks by about 30%. Instead, delaying your claim until you reach the age of 70 can result in a substantial increase in your monthly payments.
Why 70? Every year you delay past your full retirement age (FRA)—which for many is around 67—your benefits grow by approximately 8% per year. This means that if your FRA benefit is $1,913.31, claiming at 62 would reduce your check to $1,339.32. However, if you wait until 70, your monthly payment could rise to $2,372.50. That’s an extra $1,033 every month for the rest of your life.
This simple strategy can lead to a more comfortable retirement, particularly if you expect to rely heavily on Social Security benefits. But is this the right move for everyone?
Decision
While the benefits of delaying Social Security are clear, it’s not always the best choice for everyone. If you’re facing health issues that could reduce your life expectancy, it might make more sense to claim your benefits early. By doing so, you could maximize your lifetime payout, even if your monthly checks are smaller.
Similarly, if you have other income streams or a large savings account and are tired of working a demanding job, claiming early might give you the financial freedom you need. For some, starting benefits early can also provide the capital needed to invest in a business or other income-generating activities.
On the other hand, if your retirement savings are limited, delaying Social Security could provide a much-needed boost to your monthly income. An additional $1,033 each month could significantly impact your ability to meet financial obligations and live comfortably. This is particularly true if you can only withdraw a limited amount from your 401(k) or IRA without risking your nest egg.
Considerations
It’s important to remember that the exact increase you’ll see from delaying benefits depends on your personal wage history. Not everyone will see a $1,033 increase, but the potential for a higher monthly benefit is significant enough to consider.
Moreover, if you’re in good health and have a reasonable expectation of a long life, delaying benefits can also protect you from outliving your savings. As you age, you may rely more heavily on Social Security, especially if your other sources of income diminish over time.
In essence, the decision to delay claiming Social Security until age 70 hinges on your personal circumstances. It’s a balancing act between maximizing your lifetime benefits and ensuring you have enough income to support your desired retirement lifestyle.
Delaying Social Security can be a powerful tool for increasing your monthly income and securing your financial future. However, it’s not a one-size-fits-all solution. Consider your health, financial situation, and retirement goals carefully before making your decision. By doing so, you can ensure that you’re making the best choice for your unique situation, whether that’s claiming early or waiting to boost your monthly checks.
FAQs
How much can delaying Social Security increase my benefits?
Delaying Social Security benefits until age 70 can increase your monthly checks by up to 32%.
Should everyone delay Social Security until 70?
Not everyone should delay; it depends on health, savings, and income needs.
What if I claim Social Security at 62?
Claiming at 62 reduces benefits by about 30% compared to waiting until your FRA.
Does my wage history affect the increase?
Yes, your wage history determines the exact increase in your Social Security checks.
Is delaying Social Security worth it if I have savings?
If your savings are low, delaying could help you secure a higher, more reliable income.