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8 Benefits of Claiming Social Security Later

Here’s how to boost your Social Security monthly payments.  

"Every month you delay your Social Security gets you a higher monthly payment for life."

You will qualify for bigger monthly payments from Social Security if you sign up at an older age. Delaying claiming Social Security is particularly beneficial to people who have a long life expectancy or want to leave larger payments to a surviving spouse. Here are some of the perks available to retirees who are willing to wait until their late 60s or age 70 to start their Social Security benefit.

Avoid a benefit reduction. The age when workers are eligible for full benefits is 66 for most baby boomers and 67 for everyone born in 1960 or later. Social Security payments are reduced if you claim them before your full retirement age. If you start your benefit at age 62, your payments will be 25 percent smaller if your full retirement age is 66, and you will get 30 percent less if your full retirement age is 67.

Collect delayed retirement credits. Workers who delay starting Social Security after their full retirement age can increase their monthly payments by 8 percent per year up until age 70. Baby boomers can get 32 percent bigger checks by starting payments at age 70, and people born in 1960 or later are eligible for 24 percent more. Of course, whether you come out ahead using this strategy depends on how long you live. "Every month you delay your Social Security gets you a higher monthly payment for life," says Andy Landis, author of "Social Security: The Inside Story." "That yields a higher lifetime payout if you live to average life expectancy or beyond." Those with a long life expectancy have the most to gain by delaying their Social Security payments.

Work and claim benefits at the same time. If you work after claiming Social Security benefits, part or all of your payments could be temporarily withheld if you earn too much. However, once you turn your full retirement age you can earn any amount without impacting your Social Security payments.


Boost your annual earnings. Social Security payments are calculated using the 35 years in which you earned the most. If you didn't work for at least 35 years, zeros are factored into the calculation and lower your monthly payments. "Social Security is based on 35 years of the highest earning," says Matthew Hague, a certified financial planner at Guide Wealth Management in New York. "If you were to retire early you might expect that is also going to impact your level of Social Security." If you work for more than 35 years, your highest earning years are used to calculate your benefit. So, if you earn more later in your career than you did in your 20s, you can prevent a few of those low income years from being used to determine your payments.

Larger payments when you are older. In the early part of your retirement you might still have the ability and energy to work, especially if you are able to find a job that you enjoy. Delaying Social Security means you won't receive payments in your early 60s, but you will bring in bigger monthly payments later on in retirement, perhaps when you no longer have the option to go back to work or could use the bigger checks to help pay for health care costs.

Bigger inflation adjustments. Social Security payments are adjusted to keep up with inflation each year. The dollar value of the inflation adjustment is larger for those who receive bigger monthly payments. For example, a 3 percent cost-of-living adjustment is worth $30 for someone who receives $1,000 Social Security payments, but would be $45 for a retiree with $1,500 monthly payments. These annual cost-of-living adjustments can add up more than 20 years of retirement.

Less stress on your 401(k) and IRA savings. "If you can wait and claim at age 70, you get basically an 8 percent increase in the benefit for every year that you delay," says Cheryl Costa, a certified financial planner and founding principal of Woodside Wealth Management in Framingham, Massachusetts. While some people might earn more than that in the stock market, those gains are certainly not guaranteed and could be much lower. Bigger Social Security payments can help you spend less of your retirement savings each year, which could help your nest egg last longer.

Maximize survivor's payments. When one member of a married couple passes away, the surviving spouse inherits the Social Security payment..... 

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