It is possible to enroll in Social Security after turning 62, but many individuals mark their 70th birthday as the time to apply. While this might appear unconventional, there are compelling advantages to delaying the process until this age. Nevertheless, this strategy may not be suitable for everyone. Here’s an overview of the benefits and drawbacks associated with postponing Social Security benefits.
What Are The Pros of Delaying Social Security Benefits?
Delaying your Social Security benefits can result in receiving larger monthly checks and a larger lifetime benefit. Every month you delay your Social Security benefits, at least until age 70, increases your checks. However, the amount you receive depends on your income during your working years and your birth year. The government assigns everyone a full retirement age (FRA) based on when they were born. Most workers today have an FRA between 66 and 67. You must wait until this age to claim the full benefit you’re entitled to based on your work history. Claiming earlier shrinks your checks while delaying increases them, so think wisely about what is best for your situation and how to get the most out of Social Security.
For example, if you were born in 1960 and have an FRA of 67, delaying your benefits until age 70 would result in a 24% increase in your monthly checks. So, if your benefit at FRA is estimated to be $2,000 per month, delaying until age 70 would increase it to $2,480 per month.
Furthermore, delaying Social Security benefits could lead to a larger lifetime benefit for those who live long enough. Although you’ll claim benefits for fewer years, the increased monthly checks can result in a larger lifetime benefit, particularly for those who live into their mid-80s or beyond. To calculate your lifetime benefit, you can use my Social Security account tool to estimate your monthly benefit at different starting ages. For instance, if you claim a $2,500 benefit for 20 years, your annual benefit would be $30,000 and your lifetime benefit would be $600,000. By comparison, if you delayed claiming until age 70 and received a $3,100 benefit for 15 years, your annual benefit would be $37,200 and your lifetime benefit would be $558,000. So, delaying benefits can be a wise financial move for those who want to maximize their lifetime Social Security benefits.
What Are the Cons of Delaying Social Security Benefits?
There are several disadvantages of delaying your Social Security Benefits and some of them include:
- Delaying Social Security benefits until age 70 means you’ll have to cover your retirement expenses on your own until then, which can be challenging. If it’s not feasible for you to delay, consider signing up earlier to avoid falling behind on bills.
- People with short life expectancies shouldn’t delay benefits until 70 because they risk not receiving any benefits at all. If you have concerns about your health or family history, it may be better to sign up for benefits at 62 and claim as much as possible.
- Delaying benefits can prevent your spouse from claiming benefits. Married couples should work together to determine the best Social Security claiming strategy. While it may make sense for one partner to delay until 70, others may decide to claim benefits sooner.
Should I Consider Delaying Social Security Benefits?
Delaying social security benefits can be a good idea for some individuals, but it ultimately depends on each person’s individual circumstances and financial goals. By delaying your benefits, you can receive a higher monthly payment in the future, as the number of your benefits increases by a certain percentage for each year that you delay claiming. This increase can be particularly beneficial for those who have a longer life expectancy or who have other sources of income in retirement. However, if you need the money sooner to cover expenses or if you have a shorter life expectancy, delaying benefits may not be the best option. It’s important to consider all of your options and consult with a financial advisor before making a decision about when to start claiming social security benefits.
Can Delay Social Security Benefits Help With Medicare Coverage?
Delaying Social Security benefits until age 70 can potentially help you qualify for premium-free Medicare Part A coverage, as long as you have worked and paid Medicare taxes for at least 10 years (40 quarters).
If you delay Social Security benefits until age 70, you will earn delayed retirement credits, which increase your monthly benefit amount. By delaying your benefits, your monthly benefit amount can increase by up to 8% per year, up until age 70. This can result in a higher monthly Social Security benefit amount for the rest of your life.
In terms of Social Security and Medicare coverage, if you have worked and paid Medicare taxes for at least 10 years, you will be eligible for premium-free Medicare Part A coverage at age 65, regardless of whether or not you are receiving Social Security benefits. However, if you delay your Social Security benefits until age 70, you may have more financial resources to pay for Medicare Part B and Part D premiums, as well as other healthcare costs that Medicare doesn’t cover.
It’s important to note that delaying Social Security benefits until age 70 may not be the best strategy for everyone, as it depends on individual circumstances such as health, life expectancy, financial needs, and retirement goals. It’s recommended that you consult with a financial advisor or Social Security specialist to determine the best strategy for your specific situation.
Key Points
- Delaying Social Security benefits until age 70 can result in larger monthly checks and a larger lifetime benefit.
- The number of your benefit increases by a certain percentage for each year that you delay claiming, up until age 70.
- Delaying benefits can be a wise financial move for those who want to maximize their lifetime Social Security benefits.
- People with short life expectancies shouldn’t delay benefits until 70 because they risk not receiving any benefits at all.
- Delaying benefits can prevent your spouse from claiming benefits, so married couples should work together to determine the best strategy.
- It’s important to consider all of your options and consult with a financial advisor before making a decision about when to start claiming Social Security benefits.
- Delaying Social Security benefits until age 70 can potentially help you qualify for premium-free Medicare Part A coverage, but it depends on individual circumstances such as health, life expectancy, financial needs, and retirement goals.
- It’s recommended that you consult with a financial advisor or Social Security specialist to determine the best strategy for your specific situation.
