Choosing when to begin receiving Social Security is one of the most significant retirement decisions many Americans face. According to The Motley Fool, while waiting until age 70 results in the largest monthly payment available, claiming earlier can lead to a higher total amount received over a shorter lifetime.
For people born in 1960 or later, full retirement age is 67. Claiming benefits before that age permanently reduces monthly payments, while delaying beyond full retirement age increases them until age 70. Although people may file for benefits after turning 70, delayed retirement credits no longer accumulate beyond that point.
Higher Monthly Payments Do Not Always Mean Higher Lifetime Benefits
According to The Motley Fool, the common assumption that delaying benefits until age 70 is always the best financial decision overlooks an important consideration: total lifetime income from Social Security. The article illustrates this with an example of a retiree entitled to $2,500 per month at full retirement age of 67. If benefits begin at age 62, the monthly payment falls to $1,750. Waiting until age 70 raises the monthly benefit to $3,100.
The larger payment becomes more advantageous if the recipient lives long enough to offset the years without benefits. Using the example provided, a person who lives until age 85 would receive approximately $558,000 by claiming at age 70. Claiming at age 67 would result in about $540,000, while beginning at age 62 would produce roughly $483,000 in total benefits.
The picture changes for someone with a shorter lifespan. According to the same source, a person who lives until age 76 would receive about $223,000 by waiting until age 70. By comparison, claiming at age 67 would yield about $270,000, while filing at age 62 would result in approximately $294,000 in total Social Security income.
Health, Family History, and Survivor Benefits Can Influence the Decision
The article advises retirees to compare different claiming ages using a range of possible lifespans rather than assuming that age 70 is the best choice in every situation. Although no one can predict exactly how long they will live, The Motley Fool reports that personal health and family history can provide useful points of reference.
Individuals in good health whose parents lived into their late 80s or beyond may find greater value in delaying benefits. By contrast, someone managing several health conditions in their early 60s whose parents died in their 70s may find that claiming earlier produces a higher lifetime benefit.
The article also notes that survivor benefits add another layer to the decision for married couples. If the higher-earning spouse dies first, the surviving spouse is generally entitled to receive a benefit equal to the deceased spouse’s monthly Social Security payment. Delaying benefits may therefore increase survivor payments, even if it does not maximize the total amount collected by the individual retiree.
According to the same source, the decision about when to claim Social Security is not straightforward. Evaluating different claiming ages and considering expected longevity and household circumstances may produce a different result than simply waiting until age 70.
