Claiming Social Security at 70 instead of 67 requires living to age 82.5 to break even on lifetime benefits.
Dying at 80 after delaying Social Security to 70 leaves you $14,400 worse off than claiming at 67.
The one exception: higher-earning spouses should consider delaying to boost their partner's survivor benefit.
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One of the hardest financial decisions you might have to make in the course of your retirement planning is figuring out when to claim Social Security. Although benefits are available to you beginning at age 62, there are financial incentives to wait longer.
If you were born in 1960 or any year after, your full retirement age (FRA) for Social Security purposes is 67. That's when you can collect your benefits without a reduction.
You can also delay your claim past FRA if you so choose. Each year you wait past FRA boosts your monthly checks by 8%, up until age 70.
Some financial experts might say that delaying Social Security is a smart move, since it boosts checks automatically and leads to more guaranteed monthly income. But if you don't expect to live past the age of 80, it may not make sense to delay Social Security at all.
Claiming Social Security at age 70, or another age past FRA, will result in boosted monthly checks. But that doesn't guarantee you a larger lifetime Social Security benefit.
The reality is that a delayed claim can work out well financially when you live long enough to make up for months or years of missed checks earlier. But if you don't expect to live past age 80, the math doesn't tend to work in favor of filing later.
Let's assume you're entitled to $2,000 a month in Social Security at 67. Waiting until 70 will give you $2,480 a month instead, but you'll lose out on three years of benefits.
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You would need to live to 82 and 1/2 to break even in that scenario -- meaning, to collect the same amount of Social Security in total based on filing at either 67 or 70. But if you only end up living until 80, filing at 70 instead of 67 will leave you with $14,400 less in Social Security on a lifetime basis, despite boosting your checks.
In fact, in general, if you don't expect to live a particularly long life, it doesn't make sense to delay Social Security. The one exception may be if you have a spouse who's likely to outlive you and you're the higher earner in your household. In that case, a delayed claim could leave your spouse with a larger survivor benefit.
But if you're single or divorced, you don't have to factor a spouse into the equation. And in that case, if you don't expect to live past 80, you shouldn't delay Social Security as long as possible.
It's easy to get caught up in Social Security strategies you see online. But it's important to remember that everyone's needs are different, and the right filing age for one person may not work out well for another.
If you're trying to decide when to claim Social Security, think about your:
Assets outside of those monthly benefits
You may also want to consult a financial advisor for help in coming up with the optimal time to file for benefits based on the factors above and others they might help you think of.
If you've saved over $1,000,000, this guide is for you. The last thing you want in retirement is to run out of money, you want your money to generate lasting income while you enjoy your life.
Now you can learn the strategies wealthy retirees use to fund their retirement with The Definitive Guide to Retirement Income from Fisher Investments. Download the guide today! (sponsor)
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