The wealthier you are, the more likely it is that you’ll benefit by delaying Social Security.
“Social Security’s rules are designed to be actuarially “fair,” which means the credits for delaying (and penalties for early filing) should give us all roughly the same lifetime income,” writes Mark Miller for WealthManagement.com.
You may know that, for each year you delay claiming benefits after your full retirement age, you land an 8% increase in benefits.
And for each year you claim benefits before your full retirement, you lose a similar amount.
So why is it wealthier people benefit most by delaying?
Higher-income people tend to live longer, says Miller.
Wealthier men live over three years longer, on average, than less-advantaged men.
Richer women live over one and one-half years longer.
That gives them more time to take advantage of the higher Social Security benefits they gain by delaying an initial claim.
The Takeaway: It’s tricky to find the perfect time to claim Social Security benefits, especially after the recent rule changes. Many advisers (us included) have special software that lets them weigh multiple claiming strategies to find the optimal one for you. In general, you’ll probably benefit by claiming earlier if you’re not in the best of health, and claiming later if you anticipate a longer lifespan.