4 Reasons Why You Would Not Delay Social Security Benefits to Age 70

By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group

Many people have heard that the optimal strategy is to delay Social Security benefits until age 70 so that you receive the maximum possible benefit. While that can be true in some situations, there are many scenarios where filing before age 70 may actually make more sense from a financial planning standpoint.

In this article, we’re going to walk through five reasons why you may not want to delay Social Security benefits to age 70, and why the decision should be based on your personal financial situation, health, and retirement goals.

1. Health Concerns and Life Expectancy

The decision to file early or delay Social Security is largely based on longevity. If there are health concerns or a shorter life expectancy, it may make more sense to file earlier rather than later.

While Social Security benefits increase over time, if you delay too long and pass away earlier than expected, you may never make up the years of missed payments.

Example

Let’s say someone is entitled to receive:

• $3,000 per month at age 67

• If they file at age 62, their benefit is reduced by about 30% to $2,100 per month

By filing at age 62 instead of 67, they would receive:

• $2,100 × 12 = $25,200 per year

• Over 5 years = $126,000 received before age 67

The question becomes: how long do you have to live for waiting to pay off?

The break-even point is typically somewhere between age 80 and 82.

• If you live past 82, delaying often results in more lifetime income

• If you pass away before 82, taking benefits earlier often results in more total dollars received

So when there are health concerns or reduced life expectancy, filing earlier can make financial sense.

2. The 50% Spousal Benefit

For married couples, the 50% spousal benefit can significantly impact when the higher-earning spouse should file.

Remember:

• The lower-earning spouse can receive their own benefit or 50% of their spouse’s benefit, whichever is higher.

• However, the lower-earning spouse cannot receive the spousal benefit until the higher-earning spouse files.

Example

Ken and Tracy:

• Ken’s Full Retirement Age benefit: $3,000/month

• Tracy’s FRA benefit: $1,000/month

• Tracy’s 50% spousal benefit: $1,500/month

If Ken files at 67:

• Ken receives $3,000

• Tracy receives $1,500

• Total household benefit = $4,500/month

If Ken delays until 70:

• Tracy can only collect her own $1,000 until Ken files

• She must wait 3 years before increasing to $1,500

• The spousal benefit does not increase based on Ken waiting until 70

So when there is a large gap between the lower-earning spouse’s benefit and the spousal benefit, it can often make sense for the higher-earning spouse to file before age 70 to unlock the spousal benefit earlier.

3. You Need the Income to Retire

Sometimes the decision is simple: you need the income to retire.

Many individuals plan to retire at 62, 65, or 67, and Social Security is a key part of their retirement income plan along with pensions, investments, or other income sources.

If delaying Social Security to age 70 means:

• You have to continue working longer than you want, or

• You have to withdraw heavily from retirement accounts early,

Then filing earlier may be the better decision because it allows you to retire when you want while maintaining your lifestyle.

In other words, Social Security is not always about maximizing the monthly benefit — sometimes it’s about making retirement possible.

4. Delaying Withdrawals from Investment Accounts

Another reason someone may file earlier is to preserve their investment accounts.

Here’s the math:

• Social Security increases about 6% per year before full retirement age

• Social Security increases about 8% per year from full retirement age to age 70

If someone has investment accounts that are earning more than 6–8% per year, it may make sense to:

• Turn on Social Security earlier

• Use Social Security income

• Allow investment accounts to continue growing

However, this is not a perfect apples-to-apples comparison because:

• Social Security increases are guaranteed

• Investment returns are not guaranteed and require market risk

But in strong market environments or for aggressive investors, this strategy can sometimes make sense.

Summary

While delaying Social Security until age 70 can increase your monthly benefit, it is not always the best financial decision. The right decision depends on:

• Health and life expectancy

• Spousal benefits

• Retirement income needs

• Investment returns

• Estate planning goals

Social Security decisions should be made as part of a full retirement income plan, not in isolation.

About Michael……...

Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.

Frequently Asked Questions

1. Is age 70 always the best age to take Social Security?
   No. Age 70 provides the highest monthly benefit, but not always the highest lifetime benefit.
2. What is the Social Security break-even age?
   Typically between age 80 and 82.
3. When should I take Social Security if I have health issues?
   Filing earlier may make sense if life expectancy is shorter.
4. How does the spousal benefit affect when we should file?
   The higher-earning spouse filing earlier may allow the lower-earning spouse to collect a larger spousal benefit sooner.
5. Does Social Security increase every year I wait?
   Yes, roughly 6% per year before full retirement age and 8% per year after full retirement age until age 70.
6. Should I take Social Security early to preserve my investments?
   In some cases, yes - especially if your investments are growing faster than the Social Security increase.
7. What happens to my Social Security when I die?
   Your spouse may be eligible for a survivor benefit equal to your benefit.
8. Can I work and still collect Social Security?
   Yes, but if you collect before full retirement age, there may be an earnings limit.
9. Is Social Security taxable?
   Yes, depending on your total income, up to 85% of your Social Security may be taxable at the Federal level.
10. Should I talk to a financial advisor before filing for Social Security?
    Yes. The timing decision can impact hundreds of thousands of dollars over your lifetime.