The Core of the Matter: Delayed Retirement Credits
The primary reason for delaying Social Security benefits past your Full Retirement Age (FRA) is to earn Delayed Retirement Credits (DRCs). For everyone born in 1943 or later, these credits increase your monthly benefit by 8% for each year you wait, up until age 70. These increases are permanent, built into your monthly check for the rest of your life, and they also affect the size of any potential cost-of-living adjustments (COLAs) you receive in the future.
At age 69, you have already earned some delayed credits, but you have not yet reached the maximum possible benefit. Waiting that final year until age 70 provides one more full year of 8% growth, permanently locking in the highest possible monthly payment.
The Financial Comparison: 69 vs. 70
Let's walk through a hypothetical example to illustrate the difference. Suppose your Full Retirement Age (FRA) is 67 and your Primary Insurance Amount (PIA) at that age is $2,000 per month. Your benefit would increase by 8% per year for every year you delay.
- Claiming at age 69: This means you have delayed for two full years (from 67 to 69). Your monthly benefit would be your FRA amount plus two years of 8% credits, so $2,000 * (1 + 0.08 + 0.08) = $2,320.
- Claiming at age 70: This represents three full years of delay (from 67 to 70). Your monthly benefit would be your FRA amount plus three years of 8% credits, or $2,000 * (1 + 0.08 + 0.08 + 0.08) = $2,480. Note that no further increase is possible by waiting past age 70.
In this scenario, waiting from 69 to 70 provides an additional $160 per month ($2,480 - $2,320) for the rest of your life. While you receive payments for fewer months, the larger checks accumulate over a long retirement, often making up the difference.
More Than Just the Numbers: Factors to Consider
Your Health and Longevity
If you are in excellent health and have a family history of longevity, delaying until 70 is often the most financially sound choice. The increased monthly benefit over a long life can lead to a significantly higher total lifetime payout. Conversely, if your health is a concern, claiming at 69 might be more prudent to ensure you receive benefits for as long as possible.
Spousal and Survivor Benefits
For married couples, the decision is even more complex. A key consideration is the survivor benefit. When one spouse passes away, the surviving spouse can claim the higher of the two Social Security benefits. If the higher-earning spouse delays until age 70, they lock in the maximum possible benefit, which can provide a much larger monthly income for the surviving partner for the rest of their life. This is often the most impactful reason for a higher earner to delay.
Current Financial Needs
If you need the income at 69 to cover essential living expenses, paying off debt, or simply to enjoy retirement, then claiming is the right move for you. The purpose of Social Security is to provide financial security in retirement, so it is there to be used when needed. Accessing benefits at 69 can be a perfectly valid strategy, especially if you have other sources of income to bridge the gap and don't want to tap into your investment portfolio.
Comparing Claiming Ages
| Feature | Claiming at 69 | Claiming at 70 |
|---|---|---|
| Monthly Benefit | Higher than FRA, but not maximized. | Highest possible monthly benefit. |
| Lifetime Benefits | Depends on life expectancy; may be less than at 70 for longer lifespans. | Can yield the highest total lifetime payout for individuals with long life expectancy. |
| Survivor Benefits | Higher than if claimed early, but less than the potential maximum. | Provides the maximum possible survivor benefit for a spouse. |
| Flexibility | Provides income one year earlier. | Sacrifices one year of income for a higher, guaranteed payment thereafter. |
| DRC Accrual | Forgoes the final year of earning 8% delayed retirement credits. | Stops accruing delayed credits; no benefit to waiting further. |
The Strategic Decision-Making Process
- Assess Your Longevity: Be honest about your health and family history. If you expect a long retirement, the extra year of delayed credits is very valuable.
- Evaluate Your Income Needs: Do you need the extra income at 69? Can other retirement assets or savings cover your expenses for one more year to allow your Social Security to grow?
- Consult with Your Partner: If you are married, discuss the impact on both your finances, especially regarding survivor benefits. This decision protects the surviving spouse, often for decades.
- Use Official Tools: The Social Security Administration provides resources to help you. The official website offers calculators and personalized benefit estimates. For more details on delayed retirement credits and how they're calculated, visit SSA Delayed Retirement Credits.
Conclusion
Financially, it is demonstrably better to take Social Security at 70 than at 69 for those seeking the maximum possible monthly payment. The final year of earning delayed retirement credits is a valuable, guaranteed increase that can significantly boost your retirement income for life. However, the best age to claim is ultimately a personal decision based on your unique circumstances, including your health, financial needs, and family situation. While waiting until 70 maximizes your benefit, claiming at 69 provides income a year sooner, which may be more important depending on your cash flow needs. Consider all these factors carefully before making your final choice.
