A nice thing about Social Security is that seniors get flexibility when registering. You may decide to apply for benefits at age 62, which is the earliest age to apply for them. Or you may decide that you would rather wait until Full Retirement Age (FRA) because then you will be entitled to your full monthly benefit based on your income history.
There is also the option to apply for Social Security outside of FRA. For every year that you delay your application beyond that point, your benefit increases by 8%, until the age of 70.
If the idea of a more generous monthly allowance sounds good to you, then applying at age 70 may seem like the right choice — at least initially. But before you make that your game plan, consider these reasons why claiming Social Security at 70 can be a bad choice.
1. You may have less income during your lifetime
It is true that delaying your application beyond FRA will result in a higher monthly benefit. But that is no guarantee for a higher lifetime benefit.
Let’s imagine that based on your pay history, you qualify for a monthly benefit of $1,600 at an FRA of 67. If you wait to claim Social Security until you turn 70, that benefit is $1,984 per month instead. month worth. And that’s a nice boost. But it does not mean that you will get ahead financially in your lifetime.
If you live to age 82 1/2, you’ll get a total of $297,600 in benefits whether you’re 67 or 70. But that means if you die before 82 1/2, you’ll end up with less lifetime income by waiting until age 70.
Now it is impossible to know how long you will live. But if you’d rather not risk falling short on lifetime benefits, it may be a safer bet to claim Social Security earlier.
2. You can be forced to continue working in a job that is bad for your health
Unless you’ve accumulated a really nice amount of retirement savings, you may not be able to leave the workforce until your Social Security benefits come in. And so if you force yourself to wait until age 70 to file a return to a job you hate.
Not only can that make you miserable, but it can also be harmful to your health. Studies have shown that high levels of stress can lead to physical health problems, and that alone is reason to consider enjoying your benefits sooner.
3. You could miss out on some retirement goals
Your retirement dreams may involve traveling or running a marathon. But if you wait too long for those things to happen, your health can deteriorate, putting those goals at risk.
One big downside to claiming Social Security at age 70 is that you’re taking that risk — missing out on the opportunity to do the things you’ve always wanted to do. On the other hand, if you claim benefits early, you may be able to chase those dreams just before your body revolts.
What is the best choice for you?
Applying for Social Security at age 70 isn’t necessarily a bad idea. And if you have a serious lack of retirement savings, this is one decision that can save you years of financial stress. Make sure you think twice before promising to postpone your benefits for as long as possible so that you don’t regret that decision.