Social Security is a crucial part of retirement planning for most Americans. However, the decision of when to start claiming benefits is not always straightforward. Many people believe that waiting until age 70 to claim Social Security will maximize their benefits, but this may not be the best strategy for everyone.
According to a study by United Income in 2019, only 57% of seniors would maximize their wealth by waiting until age 70 to claim Social Security. The Centers for Disease Control also notes that the average life expectancy for someone in their 60s is close to 70 years old. This means that there is only a slightly better than 50% chance that waiting until 70 is the optimal claiming age.
It is important to consider factors such as health and family history when deciding when to claim Social Security. If you have a chronic disease or a family history of early deaths, claiming earlier might be more beneficial. On the other hand, if you are in above-average health and have long-lived family members, waiting until 70 may be the better choice.
Another risk to consider is the sequence of return risk.
Deciding when to claim benefits
This is the risk that your retirement portfolio may experience weak returns in the early years of retirement.
If you rely heavily on your retirement savings in your 60s while delaying Social Security, this can deplete your savings faster. It is important to manage this risk by adjusting withdrawal rates and asset allocation. The decision of when to claim Social Security also affects your spouse’s benefits.
Spousal benefits can be as much as half of the primary beneficiary’s amount, and both spouses must claim benefits for the lower-earning spouse to receive spousal benefits. In many cases, neither spouse should wait until 70, especially if it prevents maximizing these benefits. Survivor benefits add another layer of complexity to the decision.
These benefits can be as high as the deceased’s monthly amount, making delaying until 70 appealing to leave a larger check for the surviving spouse. However, determining the best strategy depends heavily on individual circumstances, and consulting a financial advisor could help in making an informed decision. In conclusion, claiming Social Security at age 70 is not a straightforward decision and depends on various personal factors.
It is important to consider all aspects of your unique situation and possibly seek professional advice to make the best choice for your retirement.
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