3 Reasons Why You Should Wait to Take Social Security | Smart Switch: Personal Finance

Let’s take a look at the top three reasons to delay receiving your Social Security benefits until age 70.

Your life expectancy has a big implication for this decision. The two main components to consider are:

1. Your current health status.
2. The longevity of his family.

If you’re in good health and your family has a history of living into your 80s or 90s, then it probably makes sense to maximize your monthly benefits by waiting until age 70 to claim Social Security.

Average breakeven the point to wait until age 70 to receive benefits is age 81 (assuming a full retirement age of 67). The break-even point is the age you will need to live to make the wait worthwhile.

In other words, as long as you anticipate living past age 81, you will receive more total benefits. The larger but less checks will offset the smaller but more checks you would receive if you claimed earlier.

This is also significant because your health care costs after age 80 will likely be higher, so the additional income could make a big difference.

Many Americans plan to continue working past typical retirement age. A 2021 survey by Cision found that nearly 33% of older Americans plan to continue working well into their 70s.

As life expectancy continues to rise, many more Americans are likely to plan to work into their 60s. In this case, it makes perfect sense to delay receiving Social Security benefits until age 70 because your benefits could be penalized by continuing to work.

If you are under full retirement age, the Social Security Administration deducts $1 for every $2 of annual earnings over $19,560. The threshold is $51,960 if you reach full retirement age in that year, and the deduction is $1 for every $3 of earnings. Also, you could pay higher taxes on your Social Security benefits since your interim income it will be higher while you are still working.

While there are times when it might make sense to take Social Security While you’re still employed, generally speaking, you’re better off waiting until you’re fully retired or at least earning less than $19,560 to claim your benefits.

In my opinion, the number 1 reason to receive Social Security benefits early is because you need the income. But if you don’t need the extra income to continue to live comfortably, it’s probably best to delay receiving your benefits.

If you planned your retirement properly, you probably have enough monthly income from your retirement accounts as your 401(k), pensioneither Roth IRA to cover your expenses and desired lifestyle.

If this is the case, you should almost certainly wait until age 70 to maximize your monthly benefits (assuming you have a long life expectancy). After all, you could receive nearly 60% more cash each month by waiting (assuming full retirement age is $1,500, the benefit at age 62 would be 30% less or $1,050. The benefit at age 70 would be 120% or $1,800, so $1,050/ $1,800 = 58%).

As your life slows down, this extra monthly income will provide a blanket of security and peace of mind so you can focus on spending time doing the things that are most important to you, instead of stressing over finances.

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