Only 4% of Americans Wait Until 70 for Social Security

The amount you receive depends on several factors, with age being the star of this particular show. Age 70 is like the grand finale of Social Security optimization – the moment when you’ve officially squeezed every last penny out of the system through delayed retirement credits.

But here’s the plot twist that would make M. Night Shyamalan jealous: practically nobody actually waits until their seventies to start collecting. According to the Transamerica Center for Retirement Studies’ 2023 report, only 4% of retirees had the patience to delay until age 70. That’s fewer people than those who still use flip phones.

Why do so few people wait when delaying could mean substantially fatter monthly checks? Well, it turns out there are some pretty solid reasons to jump on the Social Security train earlier. Understanding these factors can help you avoid making a decision you’ll regret faster than that questionable haircut from the 1980s.

How Social Security Calculates Your Retirement Benefits

Your Social Security benefit calculation is more complex than assembling IKEA furniture without instructions. Fortunately, the system does most of the heavy lifting while you sit back and wonder where all your money went over the years.

Here’s the breakdown: Social Security takes your covered earnings and adjusts them for inflation. Then it picks your 35 highest-earning years like a greatest hits album. If you worked fewer than 35 years, you get zeros for the missing years, which is about as helpful as a chocolate teapot.

This creates your average indexed monthly earnings or AIME. From there, Social Security applies a formula that would make your high school math teacher proud to determine your primary insurance amount.

For 2025, the calculation works like this:

• 90% of your first $1,226 of monthly earnings, plus
• 32% of earnings between $1,226 and $7,391, plus
• 15% of earnings above $7,391

Notice how the percentages drop faster than your motivation on Monday morning? That’s intentional design, not a cruel joke.

Don’t panic if you didn’t save every tax return since the Carter administration. You can check your estimated monthly benefit in your online SSA account, assuming you remember your password.

When Can You Start Collecting Social Security Benefits?

You can start collecting Social Security at age 62, but there’s a catch bigger than the one in your favorite romantic comedy. Taking retirement benefits before your full retirement age means accepting permanently reduced monthly payments. It’s like ordering a small coffee when you really need a large – technically it works, but you might regret it later.

Your full retirement age depends on your birth year:

• Born 1943-1954: Age 66
• Born 1955: Age 66 and 2 months
• Born 1956: Age 66 and 4 months
• Born 1957: Age 66 and 6 months
• Born 1958: Age 66 and 8 months
• Born 1959: Age 66 and 10 months
• Born 1960 or later: Age 67

Once you reach your full retirement age, you qualify for 100% of your calculated benefits. However, here’s something that might surprise you more than finding money in your old coat pocket: 100% isn’t actually the maximum you can receive from Social Security.

The Benefits of Delaying Social Security Until 70

If you delay collecting Social Security past your full retirement age, you can boost your benefit beyond 100%. Every month you wait earns delayed retirement credits that increase your monthly payment like compound interest on steroids.

The rate of increase depends on your birth year:

• Born 1933-34: 5.5% annual increase
• Born 1935-36: 6.0% annual increase
• Born 1937-38: 6.5% annual increase
• Born 1939-40: 7.0% annual increase
• Born 1941-42: 7.5% annual increase
• Born 1943 or later: 8.0% annual increase

Most current workers fall into that last category, earning an 8% annual boost for each year they delay. That’s a guaranteed 8% return, which is better than most investment advisors can promise without crossing their fingers behind their backs.

However, these credits stop at age 70. There’s no additional benefit to waiting beyond that point, so age 70 becomes your optimal claiming age mathematically speaking.

Research from Morningstar suggests that retirees seeking maximum lifetime income should consider delaying Social Security filing. This strategy works best when you have other income sources to cover expenses while waiting. Meanwhile, your retirement accounts can continue growing instead of being raided like a teenager’s piggy bank.

Delaying can also benefit couples where the surviving spouse can claim the larger benefit. It’s like having a backup plan for your backup plan.

The Drawbacks of Delaying Social Security Benefits

While delaying Social Security can increase your total lifetime benefits, it doesn’t make sense for everyone. Several legitimate factors might lead you to start collecting before age 70, and none of them involve impatience or poor impulse control.

The main considerations include your life expectancy, whether you have sufficient resources to cover expenses without Social Security, and your confidence in the program’s long-term stability. Let’s explore these reasons why waiting until 70 might not be your best strategy.

You Might Need to Tap Retirement Accounts Earlier

Imagine you need to retire at age 67 due to health issues or job loss. If you don’t have other income sources, delaying Social Security could force you to make larger withdrawals from your retirement accounts than planned. This scenario could backfire faster than a practical joke gone wrong.

The reduced growth potential in your retirement accounts might offset the higher Social Security payments you’d eventually receive. It’s like robbing Peter to pay Paul, except Peter is your future self and Paul is your current self.

Using a combination of Social Security benefits and portfolio withdrawals also protects against “sequence of returns risk.” This occurs when market downturns early in retirement shrink your portfolio just when you need to start making withdrawals. Each withdrawal takes a bigger bite out of your remaining balance, potentially causing you to run out of money sooner than expected.

Balancing multiple income sources provides flexibility and reduces dependence on any single source during volatile market conditions. It’s like having multiple backup generators during a power outage.

Your Health Situation May Not Support Waiting

If you’re dealing with serious health issues and don’t expect to live a long life, waiting until age 70 for maximum benefits might not make practical sense. It’s like saving your best wine for a special occasion that might never come.

Depending on your situation, you might even want to claim Social Security before reaching full retirement age. While reduced monthly payments aren’t ideal, delaying could mean receiving very few benefits or none at all.

However, many people overestimate their mortality risk more than they overestimate their cooking abilities.

“Longevity risk is a problem that’s happening more frequently,” explains R. Dale Hall, Managing Director of Research at Society of Actuaries. “In 2024, roughly 100,000 people were expected to reach 100 years of age in the U.S. But looking forward, the Census Bureau says that could quadruple to more than 420,000 by 2054.”

Everyone has a breakeven point where smaller early payments are eventually offset by larger later payments. If you have a serious health condition, factor that heavily into your decision. Just make sure your retirement plan accounts for the possibility that you might outlive your pessimistic predictions.

Concerns About Social Security’s Future

Some people prefer collecting Social Security benefits as soon as possible because they worry about the program’s long-term viability. It’s like eating dessert first because you’re not sure if dinner will be served.

About 40% of Americans worry that Social Security will be reduced or won’t exist in the future, according to the Transamerica Center for Retirement Studies’ 2024 report. These concerns aren’t entirely paranoid conspiracy theories.

The Social Security Administration’s own 2024 report states that the trust fund will only pay 100% of scheduled benefits until 2033. After that point, program income will only cover 79% of scheduled benefits. It’s like your favorite restaurant announcing they’ll only serve three-quarters of your usual meal after next year.

While Congress could find ways to supplement the difference, not everyone believes politicians will act decisively. If you’re in this camp, collecting benefits while you’re confident they’ll be available makes perfect sense.

Alternative Ways to Fund Your Retirement

Social Security was never designed to be anyone’s only source of retirement income. Relying solely on Social Security is like trying to fill a swimming pool with a garden hose – technically possible, but you’ll be waiting a very long time.

If you’re fortunate enough to have a pension, that income might cover expenses until you decide to claim Social Security benefits. Many retirees rely on withdrawals from tax-deferred accounts like 401(k)s and traditional IRAs, or tax-free accounts like Roth IRAs. The longer you leave money in these accounts, the more potential they have to grow.

You can also use earnings from taxable brokerage accounts, savings products like certificates of deposit, money market accounts, and other cash equivalents. Insurance products and real estate investments are also popular retirement funding options.

Partial retirement through part-time work can provide ongoing income. However, continuing to work isn’t always realistic as you age. Older workers may face challenges finding employment due to outdated skills, age discrimination, or health issues.

The key is diversifying your retirement income sources so you’re not putting all your eggs in one basket. After all, even the most reliable basket occasionally gets dropped.