3 Reasons Delaying Social Security Could Be a Huge Mistake

When it comes to deciding when to apply for Social Security benefits, you have several options. You can deposit at age 62 to start receiving checks as soon as possible, or you can wait a few months or years to earn larger monthly payments.

Retirees are often advised to wait until age 70 to start claiming Social Security, as this will result in the largest possible payments each month. However, there are a few reasons why not claiming might be risky.

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1. You may not have as much time to enjoy your retirement

If you wait too long to register for Social Security, you may regret your decision.

Delaying Social Security benefits is banking on your health. If you’re going to wait until age 70 to start getting monthly checks, you have to hope that you’ll stay healthy long after that age to give yourself enough time to enjoy retirement. If you apply for benefits at age 70 and then develop health problems at, say, age 75, you may wish you had filed your claim sooner.

Even if you are in excellent physical shape, it is impossible to predict what the future will hold for you. More than a third of current retirees say they had to retire earlier than expected due to health issues, according to a survey by the Aegon Center for Longevity and Retirement. If you plan to stay healthy well into your 70s, you could potentially be putting your retirement in jeopardy.

2. You may not live long enough to break even

Your break-even point is the age at which the total amount you receive by delaying benefits exceeds the total amount you would have received by claiming it earlier. If you don’t live long enough to reach this stage, you would have received more in your lifetime if you had claimed benefits earlier.

Your equilibrium age will depend on the amount you receive in benefits each month. The average retiree receives just over $1,500 a month in benefits, according to the Social Security Administration. Suppose you reached full retirement age at age 67 and received $1,500 per month at that age. By claiming at age 62, your benefits would be reduced by 30%, giving you a monthly total of $1,050. Wait until you’re 70 and you’ll get a 24% raise, or $1,860 a month.

Here is the amount you would receive in benefits over your lifetime based on the age you started claiming:

Age Total lifetime benefits when filing at age 62 Total lifetime benefits when filing at age 67 Total lifetime benefits when filing at age 70
67 $63,000 $0 $0
70 $100,800 $54,000 $0
75 $163,800 $144,000 $111,600
80 $226,800 $234,000 $223,200
85 $289,800 $324,000 $334,800

Data source: author’s calculations.

In this scenario, if you were to apply for benefits at age 70, you would need to live to about age 85 to earn more over your lifetime than you would have obtained by claiming them earlier. If you have reason to believe that you might not live that long, you might be better off claiming as soon as possible.

3. You can’t change your mind

Ideally, you will have thought a lot about when you should apply for benefits before you actually deposit. But if you start applying for Social Security and immediately regret it, it’s easier to reverse your decision when you apply early.

If you apply for benefits earlier, you have a chance to change your mind and reconsider your decision. You have 12 months from the time you start applying to withdraw your application and submit an application at a later date. However, you will have to repay any benefits you have already received. It’s not always an easy task, but it can be done.

If you delay benefits, however, you won’t change your mind. When you’re 70 and realize you should have claimed sooner, you can’t go back in time and reverse your decision.

Deciding when to apply for benefits can be difficult, and there are benefits to delaying Social Security. In some cases, however, claiming earlier will result in a happier retirement.

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