Should you delay your Social Security? Benefits & considerations

Choosing the right time to retire—and start taking Social Security—can be a challenge. If you wait to claim, you allow your benefit to grow, and that can significantly increase your retirement income. But delaying Social Security isn't a cut-and-dried decision. It's important to take your personal situation into account as you weigh the factors that could influence your decision.

Let's look at what to consider when deciding whether or not to delay claiming your Social Security retirement benefit.

The amount you receive from Social Security is based on how much you earned during your working years and the age at which you decide to start receiving benefits. You will receive your full benefit amount, which the Social Security Administration calls your "primary insurance amount" (PIA) if you file at your full retirement age (FRA). That's 67 if you were born in 1960 or later. You can receive your benefits as early as age 62, but you'll get a reduced monthly amount for the rest of your life.

You can also choose to delay claiming until after your full retirement age in exchange for a larger benefit. For every month you wait, your benefit increases by 8% per year. You can continue holding out for these delayed retirement credit percentages until you turn 70. After reaching that age, however, your benefit amount will stay the same, so there's no reason to delay further.

How does claiming Social Security compare at 62 vs. 67 vs. 70?

Explore the trade-offs and key considerations of taking Social Security early, at full retirement age or delayed.

View our comparison

The advantage to delaying retirement in terms of Social Security payments is that your monthly amount can be significantly higher. Consider this comparative hypothetical example:

• Assume your full benefit at your FRA (for this example, we'll use 67, the FRA for those born in 1960 or after) is $2,000 per month.
• If you claim as early as you can at age 62, your monthly benefit will be about 30% smaller at $1,400 for the rest of your life.*
• If you wait to claim until 18 months after your FRA, your monthly benefit will be about 12% larger at $2,240 for the rest of your life.*
• If you decide you can wait until age 70 to claim, your monthly benefit will be about 24% larger at $2,480 for the rest of your life.*

* Just keep in mind that your benefit amount will be increased by the Social Security cost of living adjustment (COLA), which is a percentage that varies each year, based on the rate of economic inflation.

As you can see, your decision about when to file for Social Security involves a clear trade-off. If you claim early or if you claim at your FRA, then you begin receiving benefits sooner. On the other hand, if you wait to file so you can take advantage of delayed retirement credits and get a larger monthly benefit, then you give up those earlier payments.

How do you decide if the trade-off is worth it?

One way to gain clarity is to consider your break-even point. This is the age (typically between 78 and 81) at which you would have received the same amount between two different filing ages.

• At any point before your break-even age, you will have received more by filing early.
• At any point after the break-even age, you will have received more by waiting.

For example, look at the numbers if you were to draw $2,000 per month at your exact FRA of 67 and compare it to if you waited until age 69 and received $2,320 per month. You would break even, or receive the same total amount of benefits under either decision, at 81.5 years old. (Social Security's Online Benefits Calculator can help you find your break-even point.)

When using the break-even point to guide your decision, consider your life expectancy. Depending on how long you expect to live, you could either draw the smaller amount earlier and for longer or the larger amount later and for less time but still end up with the same amount in both cases. If you believe you won't live until the break-even point, then it may make sense to claim even earlier. But if you have longevity on your side, delaying your benefit will be increasingly valuable the longer you live.

“Some people would rather be cumulatively ahead in the earlier years than cumulatively ahead in the later years,” explains Eric Berg, an Advice Service & Digital Tools consultant at Thrivent. “While I’d personally rather be ahead before age 80 than after age 80, if I think I’m going to live to 90 or 100, it still may be best for me to delay.”

Do you plan on working during retirement?

Understand the impact of taking Social Security while working.

Explore earning limits, taxes & more

Delaying Social Security is a good choice for many people, but that doesn't mean it's your best option. Maximizing how much you can get over your lifetime from Social Security payments is a personal calculation that depends on your circumstances.

Figuring out when to take Social Security has a lot of moving parts. As you decide between taking benefits early or waiting as long as you can, here are some things that can influence what's right for you:

• Risk tolerance. Although this phrase often makes people think of investments, it applies to other areas of your financial life. Because your Social Security is guaranteed, it is not affected by investment volatility. Delaying your Social Security to maximize your benefit provides insulation from market fluctuations. If you are risk-averse, then delaying Social Security can provide you with additional protection.
• Health. The longer you live, the more valuable delayed credits are. Your life expectancy depends in part on your health. That includes your personal physical condition as well as your family history. If you're affected by disease, sickness or injury, it may not be the most strategic option to delay benefits. That's especially true if you need the money now to pay for your care and to avoid becoming a burden on your family.
• Inflation concerns. Unlike many other sources of income in retirement, Social Security has a built-in inflation adjustment. If you have a larger benefit, more of your retirement income is protected.
• Other income sources. To be able to delay taking benefits, you have to have enough other means to pay for your food, housing and other living expenses in the years before you claim. For many people, delaying Social Security payments simply isn't an option because they may not have enough savings or any other income sources.
• Taxes. Social Security benefits are not taxed the same as other income. You will never have to pay tax on 100% of your Social Security benefits. You may not owe taxes on any of your Social Security benefits. At most, you'll have to include 85% of your benefit in your taxable income. The exact amount depends on how much other income you have. This tax efficiency is one aspect of the value of delayed credits.
• Longevity risk. The top fear among retirees is running out of money. The longer you live, the greater that risk becomes. Because Social Security benefits are guaranteed to pay out for your lifetime, maximizing your benefits through delayed credits provides an even greater cushion if you deplete your other savings.

Ultimately, you want to optimize your benefit amount. At the core, it's a balance of how much you can get and for what duration. If you have a family history of lower-than-average life expectancies, then taking a smaller amount of money when you're younger may be more valuable than what you would collect if you waited to claim. Sometimes health is a deciding factor in deciding if delayed retirement credits are worth it. If you have or develop a condition that keeps you from working, you may not be able to hold off until 70—especially if you're carrying debt and don't have other income sources.

If you're married, your Social Security claiming decision shouldn't be a stand-alone choice. It's a good idea to think about when both you and your spouse will claim and how survivor benefits could impact your family.

If you're married, you can claim a benefit based on your own earnings record or your spouse's record. The spousal benefit can be as high as 50% of their spouse's primary insurance amount. In some situations, it makes sense for a lower-earning spouse to file for their own benefit at FRA, then switch to spousal benefits when the older spouse files after FRA.

If you die, your spouse will receive either their own benefit or a benefit equal to the benefit you were collecting before you died—not both. It often makes sense for the higher earner to delay claiming even if their spouse doesn't delay. This protects the surviving spouse from a loss of income. The surviving spouse would be eligible for the decreased spouse's benefit. If the deceased died before filing but after FRA, the benefit would include delayed retirement credit.

Deciding whether to delay your Social Security benefits can feel complex, but it doesn't have to be a burden. Understanding how Social Security benefits are calculated and what to expect when it comes to claiming them can give you confidence that you're making the right choice for you and your family. For support deciding whether to delay Social Security benefits, connect with a Thrivent financial advisor.