Should you wait until 70 to take social security?
Deciding when to start receiving Social Security benefits is a significant financial decision that can impact your retirement income for the rest of your life. The question of whether you should wait until 70 to take social security has been a topic of debate among retirees and financial advisors alike. In this article, we will explore the advantages and disadvantages of waiting until 70 to claim your Social Security benefits, helping you make an informed decision for your retirement.
Advantages of Waiting Until 70 to Take Social Security
1. Higher Monthly Benefits: By waiting until age 70 to claim your Social Security benefits, you can maximize your monthly payments. Social Security benefits increase by approximately 8% each year for every year you delay claiming beyond your full retirement age (FRA), which is typically between 66 and 67 for most individuals.
2. Increased Cost of Living Adjustments (COLA): Waiting until 70 can also result in higher COLA adjustments, as your benefit amount will be based on a higher starting point. This can help ensure that your retirement income keeps pace with inflation.
3. Potential for Spousal Benefits: If you are married, waiting until 70 to claim your Social Security benefits can be advantageous. Your spouse may be eligible for a higher spousal benefit if they wait until they reach their FRA or later to claim their own benefits.
Disadvantages of Waiting Until 70 to Take Social Security
1. Reduced Early Retirement Incentives: If you claim Social Security benefits before reaching your FRA, you may receive a reduced monthly payment due to early retirement incentives. Waiting until 70 means forgoing these incentives, which could result in a lower overall benefit amount if you were to claim earlier.
2. Health Concerns: Some individuals may be concerned about their health and the possibility of not living long enough to recoup the benefits they would have received if they had started claiming earlier. In such cases, waiting until 70 may not be the best financial decision.
3. Immediate Financial Needs: Some retirees may have immediate financial needs that require them to claim Social Security benefits before reaching age 70. In these situations, waiting until 70 may not be feasible.
Conclusion
The decision of whether to wait until 70 to take social security depends on your individual circumstances, including your health, financial needs, and retirement goals. While waiting until 70 can provide higher monthly benefits and increased COLA adjustments, it may not be suitable for everyone. It is essential to weigh the advantages and disadvantages carefully and consult with a financial advisor to make the best decision for your retirement.
