The great thing about social security is that you don’t have to apply for benefits at a certain age. Instead, there is a range of ages to choose from. But you may want to land at age 70 for a specific reason.
It’s all about capturing a solid income
The earliest point at which you can claim Social Security is age 62. However, doing so will put a pretty big blow to your monthly allowance. This is because you are not entitled to that full benefit until you reach full retirement age or FRA. FRA starts at age 66, 67 or somewhere in between, depending on the year you were born.
You can also defer your Social Security application after FRA, and for every year you do until age 70, your monthly benefit increases by 8%. If your FRA is 67, that means waiting until age 70 to increase your Social Security income by a pretty impressive 24%.
It is for this reason that applying for Social Security at age 70 makes a lot of sense. While deferring benefits until then means waiting and may mean working longer, once you commit to that higher benefit, you can enjoy it for the rest of your life.
Now think about your other sources of retirement income. Do any of them have a guaranteed 24% boost? Probably not.
In fact, even if you retire with a nice amount of money thrown away in an IRA or 401(k) plan, you never know how your investments in that plan will perform. If they do poorly, or if the stock market goes through a series of crashes, you could end up getting a lot less money from your retirement savings than expected.
On the other hand, if you wait to claim Social Security until age 70, you are guaranteed to enjoy increased benefits. It doesn’t matter how well the stock market performs – that just has nothing to do with Social Security.
Another thing to consider is that you really don’t know what your retirement will cost you until that period of life begins. Sure, you can crunch numbers and try to estimate your cost of living. But you may not be able to accurately account for all expenses until you actually find yourself in that situation.
By filing for Social Security at age 70 and increasing your monthly benefit as much as possible, you can reduce your financial stress in the face of higher-than-expected bills. And so for that peace of mind alone, it may be worth delaying your submission for as long as possible.
Weigh your options
Applying for Social Security at 70 isn’t a smart move for everyone. If your health is bad towards retirement and you don’t expect to live a very long life, you may want to claim your benefits at an earlier age. But if you have no reason to expect a shorter lifespan and you want the financial security that comes with a higher guaranteed benefit for life, then singing at age 70 is the way to go.