Choose Your Social Security Age With Care

Sheila Willis |


With more than 10,000 Baby Boomers crossing the retirement threshold every day, the Social Security check writing machine has kicked into overdrive.  While the temptation is strong to start taking benefits at “normal” Social Security retirement age of 66, or even earlier at age 62, retirees may be leaving thousands of dollars on the table by not waiting as long as they possibly can to tap into their Social Security benefit.

Most people know their full retirement age (FRA) is the age at which they can receive their full Social Security benefit.  For most people retiring today, their FRA is 66.  And most people also know that they can take reduced benefits as early as age 62.  But very few people realize that if they delay their retirement they can receive an 8 percent increase in their FRA benefit for each year they delay up to age 70.  That’s based on the Delayed Retirement Credits (DRCs) earned for each year you wait to take your Social Security benefit.  Think about that.  Where else can you receive a guaranteed 8% increase in your monthly benefit?  To understand the overall impact it can have on your total Social Security benefits, consider the following example:

Mr. & Mrs. Smith are eligible for full benefits at age 66.  Their monthly benefits are projected to be $1,874 for Mr. Smith and $2,281 for Mrs. Smith.  This chart illustrates the increase in monthly benefits when they are delayed over the next four years.

Monthly Benefit Age 66   Age 67 Age 68 Age 69 Age 70
Mr. Smith 1,874 2,023 2,172 2,322 2,472
Mrs. Smith 2,281 2,463 2,645 2,827 3,009

By waiting until each reaches age 70 to begin collecting their benefits, the Smiths would earn a 32% greater monthly payout which will be guaranteed for as long as they each live.

Of course, waiting until 70 to receive Social Security benefits would only make sense if you are in good health and expect to live long enough to recoup from the delay in receiving monthly benefits.  And it would only be appropriate if you have an income stream from a job or other savings that can bridge the income gap to age 70.  As with any financial decision of such magnitude, it is important to know all your options and the assistance of a qualified financial professional knowledgeable can be very helpful.  The mistake many people make is to simply fill out the form and check the boxes without consulting a knowledgeable professional.  There are many facets to Social Security and the choice you make at retirement may have unconsidered consequences on your spouse’s benefit or a death benefit.  Make sure to seek the guidance of a knowledgeable retirement income advisor to prevent any future regrets.