• James Robinson CFP

Do I Want To Wait Until Age 70… Or Start Now?

Updated: Sep 25, 2018



So, you will arrive at your full retirement age (FRA) of 66 in just a few months and you are troubled by the following question:


Do I want to wait until age 70? Or should I start my Social Security Checks now?




Much to Gain?

The fact is that at age 70, you'll get 132% of the monthly benefit because you delayed getting benefits for 48 months. Some experts say that you may not gain much by delaying until age 70. While that 32% increase in your benefits if you hold off until age 70 can seem like a no-brainer goal, think again. Yes, the payments will be significantly bigger…but you'll be receiving a lot fewer checks. If you delay starting to collect from age 67 to age 70, you will miss out on 36 monthly paychecks. That’s a lot of cheddar! This amounts to 3 year’s worth of payments.


Inconvenient Truth The inconvenient truth is simply this, If you live an average length life, the total dollars you receive from Social Security during your lifetime isn't likely to vary drastically...no matter when you start collecting. That's because the system is designed to be a wash for those with average-length lives. The Social Security Administration does not hide that fact. The SSA said that if you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between.


The Hidden Risk of Claiming Social Security Lump-Sum Benefits

If you do decide to wait until age 70, beware of the hidden risk of claiming Social Security lump-sum benefits. As we mentioned earlier, between your full retirement age (FRA) and age 70, your unclaimed benefits rise in value at the rate of 8% a year, thanks to Delayed Retirement Credits. If you file for your retirement benefit at age 70, you will qualify for the highest possible benefit…payments that are 32% higher than your benefit at age 66 and 76% higher than at age 62.


The Social Security Administration offers you a lump sum payment that's worth six months of benefits. On your 69th birthday, you take a lump sum to but that condo in Hilton Head South Carolina. Sounds nice, but accepting that money has consequences you need to consider. The danger is that if you file at age 70 after receiving a six months lump-sum payment, your benefits would be calculated as if you had filed six months earlier…at age 69½. Effectively, you will lose out on six months of delayed retirement credits, which reduces your monthly payments by 4% for the rest of your life.


Suspending Social Security Retirement Benefit Payments

More good news, if you have reached full retirement age, but are not yet age 70, you can suspend retirement benefit payments. Unexpected changes may occur after you make your decision about when to start your Social Security Retirement benefits. Some people go back to work out of interest to stay active or boredom. Or maybe they won the lottery…it has happened.


An Example: Suspending Retirement Benefit Payments

Craig started his Social Security retirement income at his full retirement age of 66. For example, purposes, Craig is entitled to a benefit of 2,488 a month. At age 68 and after receiving two years of income of $59,712 ($29.856 a year) …Craig decides to suspend his payments.

He got a call from his old firm. They want him to come out of retirement to run a special project in which his known expertise is needed. Craig is looking forward to getting back to work. He will get full salary and benefits. Craig will also resume paying Social Security taxes until age 70.


At age 70, Craig’s social security payment will be approximately 16% higher when they resume at age 70. This would be due to delayed retirement credits (DRCs), which are credited at a rate of 2/3rds of 1% per month for each month that you defer drawing your benefits between full retirement age and age 70, which works out to 8% per year. (Delayed Retirement Credits )


Here's more good news…if Craig continue working, he could raise his benefit rate even further. Social Security retirement benefits are based on a person's highest 35 years of inflation-adjusted earnings, so Craig’s monthly benefit rate will increase as his salary increases each year over the next two years.


Change Your Mind If you are receiving Social Security Retirement benefits and you change your mind about when they should start, you may be able to withdraw your Social Security claim and re-apply at a future date.

  • However, if you change your mind 12 months or more after you became entitled to retirement benefits, you cannot withdraw your application.

  • You are limited to one withdrawal per lifetime.

  • You must repay all the benefits you and your family received based on your retirement application.

Here’s how you can suspend and delay your payments.

  1. If you apply for benefits and the Social Security Administration has not yet decided that you are entitled, you may voluntarily suspend benefits for any month for which you have not received a payment.

  2. If you are already entitled to benefits, you may voluntarily suspend retirement benefit payments up to age 70 beginning with the month after the month when you make the request.

Convenient The neat and convenient thing here is that do not have to sign your request to suspend benefit payments. You may call the Social Security Administration at 1-800-772-1213 (TTY 1-800-325-0778) or send them a message via MySocialSecurity.com. Another option is to go www.ssa.gov and fill out Social Security Form SSA-521. Include the reason why you want to withdraw the application on the form. The service will suspend your benefit payments the following month. They will start automatically the month you reach age 70 or before age 70.


FULL DETAILS…go here: Suspending Retirement Benefit Payments


References and Resources

3 Reasons to File for Social Security on Time: The Motley Fool |https://www.fool.com/retirement/2018/07/10/3-reasons-to-file-for-social-security-on-time.aspx

The Hidden Risk of Claiming Social Security Lump-Sum Benefits: Time.com |http://time.com/money/4189633/social-security-lump-sum-risk/

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