Social Security at 70: Maximizing Your Benefits – Is It Worth the Wait?

Your Social Security benefits are calculated based on your earnings during your 35 highest-paid years on the job. That's a formula you don't have any control over. What you can control, however, is how high or low your monthly benefit ends up being based on that formula.

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If you claim Social Security at full retirement age, or FRA, you'll get the full monthly benefit your earnings history entitles you to. FRA is either 66, 67, or 66 and a specific number of months, depending on what year you were born. You can also claim benefits as early as age 62 – an option many seniors jump on each year. Though filing before FRA reduces your monthly benefit, you also get to claim it sooner.

But then there's the option of going to the opposite extreme: claiming Social Security after FRA. For each year you delay your filing, your benefits go up 8%, up until you reach age 70. It's for this reason that 70 is generally considered the latest age to sign up for Social Security.

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Of course, the drawback of claiming benefits at 70 is obvious: You have to wait a really long time to collect your money, and if you don't end up living a particularly long life, you could wind up with less Social Security income than you would by filing earlier. But in spite of that, it still pays to file for benefits at 70 for one big reason: It's the easiest guaranteed way to boost your retirement income.

The upside of claiming Social Security at 70

You'll often hear that there's no such thing as a risk-free investment, and that statement is true. Unless you house your retirement savings in cash, there's no guarantee that you won't lose money in your IRA or 401(k) through the years. After all, your stock investments in your retirement plan could sink in value during a market crash. You could buy bonds or bond funds that lose value despite their inherent stability. But if you delay Social Security past FRA, you're effectively guaranteed an 8% return on those benefits each year in the form of a boost. And that's an offer that's pretty hard to beat.

Of course, when you delay Social Security, you do run the risk of coming away with a lower lifetime benefit. Boosting your monthly benefit is great, but ultimately, your goal should be to come away with as much Social Security income as you can while you're alive. If your health is poor, delaying your benefits generally makes little sense. But if you're in good shape, and there's no reason to think you won't live a reasonably long life, then delaying Social Security could be your ticket to more retirement income.

It especially pays to consider claiming Social Security at 70 if you don't have a particularly robust IRA or 401(k) as your senior years approach. Social Security will generally replace just 40% of your pre-retirement income if you're an average wage earner, and you should expect to need roughly twice that amount to maintain a decent standard of living. Boosting your benefits by waiting to file will help you replace more of your former earnings, so if you have the option to sit tight until 70, it could really make sense to go that route.

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