For those born in 1960 or later, age 67 is the full retirement age (FRA), which is when you are eligible to receive 100% of your Social Security benefits. By contrast, waiting until age 70 provides delayed retirement credits that result in a significantly higher monthly payout for the rest of your life. Deciding between these two options is a complex decision with profound long-term financial implications. Evaluating your personal health, existing savings, and overall financial strategy is essential to making the right choice for your retirement.
The Financial Advantages of Waiting Until 70
Delaying your Social Security benefits past your FRA of 67 is often the optimal strategy for maximizing your monthly payments. For every year you wait beyond your FRA until age 70, your benefit amount increases by 8%. For someone with an FRA of 67, this can lead to a 24% increase in monthly payments by waiting just three years. This increase is locked in for life and is also subject to cost-of-living adjustments (COLAs), which helps protect your income against inflation over time. The higher monthly income can provide a greater sense of financial security, especially during the later years of retirement when other assets may be depleted. For a married couple, if the higher earner delays their benefits, it can also lead to a higher survivor benefit for the remaining spouse. This can provide a crucial safety net for the surviving partner.
The Considerations for Taking Benefits at 67
While waiting until age 70 offers the highest monthly payout, taking benefits at your FRA of 67 is the compromise option that many retirees choose. At age 67, you receive your full, unreduced benefits, which are not subject to the penalties associated with claiming early at age 62. This provides a solid and reliable income stream without a multi-year delay. This option may be particularly attractive if you have a lower life expectancy due to health issues or family history, as it allows you to collect benefits over a longer period, even if the monthly check is smaller than it would be at 70. The income from Social Security at age 67 can also be used to offset living expenses, allowing other retirement accounts, such as 401(k)s or IRAs, more time to grow. This can be a smart strategy for managing your overall retirement portfolio.
Key factors to weigh for your retirement decision:
- Health and life expectancy: If you anticipate a shorter-than-average lifespan, claiming at 67 might provide a higher total lifetime payout. Conversely, if you expect to live a long life, delaying to 70 is often the most financially rewarding strategy.
- Other income sources: Assess your other assets, such as savings, investments, or a pension. If you can comfortably live on these other income sources between 67 and 70, delaying Social Security becomes a much more viable and attractive option.
- Spousal benefits: If you are married, consider the impact on your spouse. Waiting for the higher earner to claim at 70 can maximize the survivor benefit for the other spouse, which is a significant consideration for long-term financial security.
- Cash flow needs: If you need the income immediately to cover living expenses or fund your desired retirement lifestyle, taking benefits at 67 can be a necessary and prudent decision.
- Emotional readiness: The emotional aspect of retirement should also be considered. If you are eager to leave the workforce and are financially able to do so at 67, the earlier start to your retirement journey may outweigh the financial benefit of a larger monthly check later on.
Comparison of Claiming at 67 vs. 70
To better visualize the trade-offs, here is a comparison of claiming Social Security benefits at age 67 versus 70 for an individual whose Full Retirement Age is 67.
| Feature | Claiming at Age 67 | Claiming at Age 70 |
|---|---|---|
| Monthly Benefit | You receive 100% of your primary insurance amount (PIA). | You receive 124% of your PIA due to delayed retirement credits. |
| Guaranteed Increase | None, as this is the baseline. | An 8% increase is applied annually from age 67 to 70. |
| Lifetime Benefit | The lifetime payout depends on your longevity; a higher total payout is possible if you have a shorter lifespan. | You will likely receive a higher total lifetime payout if you live into your 80s and beyond, according to studies. |
| Flexibility | Provides immediate access to your full benefits, offering greater flexibility and an earlier start to retirement. | Requires you to find alternative ways to fund your living expenses for three additional years, which can restrict your early retirement. |
| Survivor Benefits | Provides a standard survivor benefit for a spouse based on your FRA benefit amount. | Maximizes the potential survivor benefit for your spouse, providing a more robust safety net. |
Conclusion
For most individuals with an average or long life expectancy, the statistical evidence and financial logic strongly favor waiting until age 70 to claim Social Security benefits. This strategy maximizes your monthly benefit, provides a guaranteed, inflation-protected income stream, and offers significant long-term security, especially for a surviving spouse. However, personal circumstances, including health, immediate cash needs, and overall retirement portfolio, must be considered. While taking benefits at age 67 is not the worst option—you receive your full, unreduced benefit—it is often the second-best choice financially. The ultimate decision should be based on a holistic assessment of your financial and personal situation, preferably in consultation with a financial advisor.
Maximize your retirement decision with these expert tips:
- Utilize online calculators: Use the Social Security Administration's online tools at www.ssa.gov to get personalized estimates of your benefits at different ages.
- Evaluate your health: Be realistic about your health and life expectancy. If you have chronic conditions or a family history of shorter lifespans, an earlier claim might be beneficial.
- Consider your spouse: If you are married, discuss claiming strategies as a couple to maximize survivor benefits and total household income.
- Check other income: Analyze your non-Social Security income sources to determine if you can comfortably bridge the gap between 67 and 70.
Ultimately, the choice between retiring at 67 and 70 is a trade-off between receiving benefits sooner and receiving a larger check later. For those with the financial capacity to wait, the delayed gratification often results in a more financially secure retirement.
Expert Resources for Retirement Planning
For additional guidance, the following resource provides helpful information for navigating your retirement options:
- Social Security Administration (SSA) Website: The official source for information on retirement benefits, including how benefits are affected by early or delayed retirement.
How to make the right choice between retiring at 67 or 70
- Assess Your Finances: Before deciding, take a comprehensive look at your total retirement savings, investments, and any other potential income sources you will have between ages 67 and 70.
- Evaluate Health and Longevity: Consider your current health status and family history of longevity. This is a critical personal factor in determining if you will live long enough for the delayed benefits to pay off.
- Use Official Calculators: Visit the Social Security Administration's website to use their tools to compare estimated benefits at both age 67 and 70 based on your earnings record.
- Factor in Marital Status: Understand how your decision impacts your spouse, particularly regarding potential survivor benefits. A higher earner's delayed benefits can provide a much larger safety net.
- Consult a Professional: A financial advisor can help you analyze your specific situation, create a personalized plan, and provide insight into tax implications and other complex factors.
By carefully considering all these aspects, you can make a well-informed decision that aligns with your financial goals and retirement dreams.
