Many Americans rely on Social Security for financial security in retirement, but while the program promises income, the size of those monthly checks is far from guaranteed.
The amount you receive is determined not only by how much you earned during your career, but also by when you decide to file for benefits.
The surprising reality is that a single decision could dramatically increase your retirement income, yet only a small fraction of retirees take advantage of it.
Why delaying until age 70 can be a game-changer
Although you can claim Social Security as early as age 62, doing so results in a permanently reduced benefit.
Filing before reaching your full retirement age (FRA), which is 67 for those born in 1960 or later, can reduce your monthly payments by up to 30%. Waiting until 70, on the other hand, comes with a significant incentive: an 8% increase in benefits for each year you delay past your FRA.
Consider this example: “If you qualify for a $2,000 monthly benefit at 62 and have a FRA of 67, waiting until 70 could give you $3,543 per month—more than a $1,500 difference. This excludes cost-of-living adjustments (COLAs), so the actual benefit you could receive at age 70 is likely to be higher.”
The math is so compelling that a National Bureau of Economic Research survey concluded “more than 90% of Americans would get the greatest lifetime benefit by waiting until 70 to sign up.” However, only about 10% of people actually do this.
Why most retirees don’t wait, and what you can do about it
If the financial reward for waiting is so large, why do so few people maximize it? For many, the answer is simple: they can’t afford to.
Some retirees rely heavily on Social Security to cover their daily expenses. Delaying until 70 may not be feasible without substantial savings or the ability to continue working.
Others have health concerns. Those with shorter life expectancies frequently prefer to file claims earlier, ensuring that they receive at least some benefits.
However, claiming early can reduce a spouse’s survivor benefits, which should be considered when planning a family’s finances.
Importantly, delaying does not have to be all or nothing. Even waiting a year or two beyond the FRA can result in a significant increase in monthly income.
Small changes, such as working part-time for longer or saving more aggressively in your 60s, can help bridge the gap until benefits start.
The overlooked Social Security “bonus”
Many retirees underestimate the importance of timing in determining lifetime income. As one financial tip emphasizes, “One simple trick could pay you up to $23,760 more… each year! We believe that once you learn how to maximize your Social Security benefits, you will be able to retire with confidence and the peace of mind that we all seek.”
While delaying until 70 is not an option for everyone, it remains the most effective strategy for ensuring higher guaranteed income in retirement. For those who can pull it off, this little-known trick could be the key to long-term financial stability.
