The Real Numbers Behind Claiming at 70
Based on recent data from sources like the Social Security Administration and financial surveys, only about 10% of retirees wait until age 70 to file for benefits. For most people, this is the maximum age to claim and receive the highest possible monthly payment. In contrast, claiming as early as age 62 is the most popular choice for both men and women, despite resulting in permanently reduced benefits. This trend points to a significant disconnect between the optimal financial strategy for many and the actual claiming behavior of the general public.
While the SSA reported that over 677,000 retired workers age 70 were receiving benefits with a delayed retirement credit in a specific data set, this figure includes anyone who waited past their full retirement age (FRA), not just those who waited until the final moment. It is important to distinguish between the number of people who are 70 and receiving benefits, and the specific subset who held out until the final year.
The Powerful Benefits of Delayed Retirement Credits
For every year you delay claiming Social Security past your full retirement age (FRA), your monthly benefit amount increases by 8%. These delayed retirement credits (DRCs) accrue every month until you reach age 70, at which point the incentive to wait stops. For individuals with an FRA of 67, waiting until 70 can result in a monthly payment that is 24% higher than their full benefit. This is a powerful, government-backed incentive to delay claiming, assuming you have the financial flexibility to do so.
How Delayed Retirement Credits Work
- 8% Annual Increase: For each year you wait past your FRA, your benefit amount grows by 8%. This is a simple interest rate, not compound.
- No Further Increase After 70: The 8% annual credit stops accruing once you turn 70. There is no financial advantage to waiting past this age.
- Benefit Recalculation: The SSA automatically applies any earned DRCs, permanently boosting your monthly checks for the rest of your life.
Why Most People Claim Early
Understanding why the vast majority of retirees don't wait until 70 is crucial for grasping the broader landscape of retirement planning. Several key factors drive early claiming decisions:
- Need for Income: Many retirees need the income immediately to cover living expenses, especially if they stopped working earlier than planned due to job loss or health issues. For them, receiving a smaller check now is better than waiting for a larger one later.
- Health Concerns: Individuals with shorter life expectancies due to health problems may choose to claim early to receive more money over a shorter period. This is a calculated risk based on personal health and family history.
- Fear and Uncertainty: Some people worry that Social Security's trust fund will run out of money in the future, prompting them to claim benefits as soon as they can. While projections show the program can pay a large percentage of benefits for decades, this fear still influences decisions.
- Loss Aversion: Research suggests that many people feel the immediate pain of 'losing' the early benefits more acutely than the joy of gaining higher future benefits. This psychological bias pushes them toward immediate gratification.
Early vs. Delayed Social Security: A Comparative Look
| Feature | Claiming at 62 (Earliest) | Claiming at 67 (FRA) | Claiming at 70 (Maximum) |
|---|---|---|---|
| Monthly Payment | Permanently reduced by up to 30% | 100% of your primary insurance amount (PIA) | 124% of your PIA (for those with an FRA of 67) |
| Lifetime Benefit | Potentially lower, especially with a longer life expectancy | Break-even point is often in your late 70s or early 80s | Potentially highest, acting as longevity insurance |
| Immediate Income | Provides earliest access to retirement income | Access to full benefit amount at standard age | Requires bridging income from other sources for several years |
| Survivor Benefits | Reduced benefit based on the worker's reduced amount | Standard survivor benefit based on the worker's FRA amount | Maximized survivor benefit based on the worker's highest possible amount |
The Impact of a Spouse's Claiming Decision
For married couples, the claiming decision is even more complex. A high-earning spouse delaying their claim to age 70 not only maximizes their own benefit but also ensures the surviving spouse receives the highest possible survivor benefit. This can be a critical element of financial planning, especially when one spouse has significantly lower lifetime earnings. Delaying can act as a form of longevity insurance for the surviving partner, providing a larger income stream for their potentially longer remaining life.
A Balanced Approach to Claiming
The choice of when to claim Social Security is highly personal and should be a carefully considered decision based on your specific circumstances. There is no one-size-fits-all answer. While the financial math overwhelmingly favors delaying until 70 for the healthiest individuals, the reality of life—health, employment, and immediate financial needs—means that not everyone can or should wait. For personalized guidance and to estimate your own benefits, the Social Security Administration's official website is an invaluable resource. Create a "my Social Security" account at www.ssa.gov/myaccount to view your personalized statement and estimate the impact of different claiming ages.
Making Your Decision
In the end, whether you join the small group that claims at 70 or the majority who claim earlier is a personal decision that balances financial optimization with life's realities. Weighing your health, financial resources, and overall retirement goals will help you find the right path. For those who can afford to wait, delaying benefits can provide a crucial financial boost that lasts for the rest of your life.
