Social Security Tip: Don’t Delay Benefits Too Long

Delaying Social Security benefits can pay off financially, but don’t delay past age 70, or you’ll lose out.

You probably know that waiting to claim your Social Security benefits until your Full Retirement Age (FRA) can result in permanently higher Social Security benefits.

For people born between 1943 and 1954, Full Retirement Age is age 66 but that’s slowly climbing higher for younger workers. For example, Full Retirement Age for someone born in 1955 is now 66 and 2 months, and it’s 67 for those born in 1960.

Of course, waiting to claim even longer – up to age 70 – will yield the highest benefits. You get 8% more for each year you delay claiming after Full Retirement Age up to age 70. That’s a significant increase, allowing you to claim benefits that are up to 32% higher.

But Certified Financial Planner™ professional and financial columnist Mary Beth Franklin, who specializes in Social Security, reminds retirees that you never want to delay benefits beyond age 70. Why? That nifty 8% per year increase we mentioned comes to an end when you hit age 70, so waiting past that age does not generate higher benefits and just causes you to miss out on payments.

Social Security penalties stemming from higher-than-allowed work earnings also stop at age 66 or Full Retirement Age, so even if you’re working and continuing to earn a full-time salary, you should apply for benefits no later than 70.

The Takeaway: Social Security is incredibly complex, with over 2700 separate rules governing benefits and payment options, says Franklin. But one thing is clear. While it typically pays to delay taking Social Security benefits up to age 70, there is no reason to delay past age 70, and can actually cost you in lost payments. So it you are nearing age 70, make plans to apply for benefits soon. You can apply online up to 4 months before you want benefits to begin, reminds Franklin.

About Mari Adam

Mari Adam, Certified Financial Planner™ has been helping individuals and families chart their financial futures for over twenty-five years. Have a question about your financial situation? Ask Mari!

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