When Waiting Until 70 for Social Security Backfires

Making the decision about when to claim Social Security can feel overwhelming, especially when you’re trying to do what’s best for your financial future. Many people believe that delaying Social Security until 70 is always the smartest choice for Social Security benefits, and it’s completely understandable why this seems logical. After all, your monthly payments do increase significantly when you delay filing past your full retirement age.

However, this approach isn’t right for everyone. Sometimes, well-meaning advice or common misconceptions can actually lead you toward a decision that might not serve your best interests. Let’s explore some situations where claiming Social Security at 70 might not be the ideal path for your unique circumstances.

Understanding the Difference Between Age 70 and Your Full Retirement Age

It’s easy to get confused about when you should actually claim your Social Security benefits, and you’re certainly not alone if you’ve mixed up age 70 with your Full Retirement Age. Your Full Retirement Age, or FRA, is actually the point when you can collect your complete Social Security benefit without any reductions. For most people today, this falls between ages 66 and 67, depending on when you were born.

Think of your FRA as your personal baseline for Social Security benefits. If you file before this age, your monthly payments will be reduced. On the other hand, if you wait beyond your FRA, you’ll receive Delayed Retirement Credits that increase your payments. Even the youngest workers today won’t have an FRA later than 67, unless Congress decides to change the current rules.

If you’re waiting until 70 simply because you think it’s your FRA, you might be missing out on years of Social Security benefits that you’ve already earned. Those delayed retirement credits are meant as a bonus for waiting beyond your actual FRA, not as your standard benefit.

When Maximizing Lifetime Income Isn’t Everything

While it’s true that delaying Social Security until 70 will boost your monthly checks, this doesn’t automatically mean you’ll receive the most money over your lifetime. Your total Social Security income depends greatly on how long you live after you start claiming benefits.

This is where being honest with yourself about your health becomes important. If you’re dealing with serious health concerns or your family has a history of shorter lifespans, claiming Social Security benefits earlier might actually provide you with more total income. The break-even point for waiting until 70 typically occurs in your early 80s. If you don’t expect to reach that age, there’s no shame in choosing to claim your benefits sooner.

Your health status deserves serious consideration in this Social Security claiming decision. Poor health conditions that might affect your lifespan make a compelling case for claiming benefits when you need them most.

Why Spousal Benefits Don’t Benefit from Waiting

If you’re planning to claim Social Security based on your spouse’s work record, the rules work differently than you might expect. Spousal benefits have their own set of guidelines that are important to understand when developing your Social Security claiming strategies.

Your maximum spousal benefit equals 50% of what your spouse receives at their full retirement age. Here’s what many people don’t realize: Spousal Benefits stop growing once you reach your FRA, regardless of how long you wait to claim them. Delayed retirement credits only apply to benefits you’ve earned through your own work history.

This means that waiting until 70 to claim a spousal benefit simply costs you years of Social Security payments without any increase in your monthly amount. If spousal benefits are your primary source of Social Security income, filing at your FRA makes the most sense financially. There’s no advantage to waiting longer when your benefit won’t increase.

The Risk of Depleting Your Savings While You Wait

The promise of larger monthly Social Security payments can be tempting enough to make you consider spending down your other retirement accounts while you wait until 70 to file. While this might seem logical, it carries risks that could affect your financial security later on.

Your retirement savings act as an important safety net for unexpected expenses, healthcare costs, and economic downturns. Rapidly using up these accounts to cover your expenses until age 70 might leave you vulnerable later in retirement, even with those higher Social Security payments.

Sometimes a more balanced approach works better than putting all your eggs in one basket. Claiming Social Security earlier while preserving more of your savings can provide greater long-term financial stability than maximizing your monthly benefit at the expense of your nest egg.

You Don’t Need to Delay Benefits to Keep Working

Some people postpone claiming Social Security because they think it will help motivate them to continue working. While staying employed longer can certainly benefit both your finances and your sense of purpose, you don’t need to give up Social Security to keep working.

Once you reach your full retirement age, you can work while receiving Social Security benefits without any penalties. The earnings test that reduces benefits for younger claimants doesn’t apply after your FRA, no matter how much you earn from your job.

This flexibility means you can enjoy the peace of mind that comes with Social Security income while still receiving paychecks from your employer. If you want to keep working past your FRA, you don’t need to sacrifice years of Social Security payments to maintain that motivation.

Remember, there’s no one-size-fits-all answer when it comes to Social Security timing. Your decision should reflect your unique health situation, financial needs, and personal circumstances. Whatever choice feels right for your situation is the right choice for you.