What this article covers
Opher Ganel explains why delaying Social Security from full retirement age to 70 pays off mainly for people who expect to outlive the average, and why the size of the payoff depends heavily on bridge income. Using Morningstar’s 2024 State of Retirement Income figures, he shows that covering the gap without tapping your portfolio more than doubles the spending gain from delaying, while four financial advisors weigh in on health, spouses, taxes and personal preferences.
Key Takeaways
Delaying Social Security pays off mainly if you live longer than average
Benefits rise by up to 8 percent for each year you delay past full retirement age and shrink by 5 to 6.7 percent per year for claiming early, calibrated so lifetime benefits roughly match at average life expectancy. Opher estimates that delaying from 67 to 70 catches up around age 84, while claiming at 62 comes out ahead of waiting until 67 only if you die before about 79. Long-lived parents, good health, never smoking, a college degree and financial security all point toward waiting.
Bridge income makes delaying Social Security far more valuable
In Morningstar’s 2024 example ($1 million in a 60/40 portfolio, $36k in annual benefits at 67, a 3.7 percent safe withdrawal rate), delaying to 70 while drawing on the portfolio lifts safe Year 1 spending only 5.5 percent, to $77k, and cuts the median Year 30 balance by 13.5 percent. Covering ages 67 to 70 with other income lifts spending 12.3 percent, to $82k, with only a 2.3 percent lower median ending balance.
Advisors say the right claiming age depends on other income, spouses, taxes and personal priorities
Advisors interviewed say clients with no other income often benefit from claiming at retirement, and that the higher-earning spouse delaying can protect the survivor, especially with a large age gap. They also caution that delaying can make more of your benefits taxable and trigger Medicare IRMAA surcharges, and that some clients reasonably prefer money while they are healthy enough to travel.
Stephen Mazer
Cecil Staton
Anthony Ferraiolo
Lauren WilliamsI’m sure you know that delaying Social Security benefits increases them.
According to the Social Security Administration (SSA), your benefits increase by up to 8 percent for every year you delay claiming them.
Conversely, they decrease by 5 to 6.7 percent per year you claim earlier than your FRA.
The following SSA table shows how your benefits are affected by when you claim, depending on when you were born.
The SSA’s calculation is intended to offer the same lifetime benefits no matter your birth year or when you first claim benefits, assuming you live exactly to your life expectancy per SSA’s Actuarial Life Table.
When Does Delaying Social Security Make Sense? 7 Signs You’ll Live Longer
As mentioned above, the SSA calculates your benefits based on the nominal life expectancy at your age when you first claim benefits.
This means that the more you delay claiming Social Security benefits and thus miss out on however many months’ worth of payments, you’ll exactly make this up if you die at the age predicted by your life expectancy when first claiming.
If you happen to live longer, you’ll come out further ahead.
If you die sooner, your lifetime benefits will be less (though you likely wouldn’t care at that point).
Another tidbit is that if your spouse survives you and has lower benefits than yours, his or her benefits would be boosted to match yours, making this a great way to help provide for him or her.
The extra 8 percent per year of delay won’t benefit him or her.
Given all this, if you expect to live longer than average, you’d likely do better by delaying when you claim. Here are seven factors that will likely make delaying the better choice.
- Your parents and grandparents lived longer than average.
- Your health is good for your age.
- You’ve never smoked.
- You don’t participate in high-risk activities (skydiving anyone?).
- You have a college or graduate degree.
- You’re Caucasian, Hispanic, or best of all Asian American.
- You’re financially well off.
If you live past age 84, your lifetime benefits would catch up with what you’d have received by then had you claimed at your (assumed) FRA of 67. Die younger and you’d “leave money on the table.”
When Is Claiming Social Security Early the Better Choice?
First, the obvious. Early claiming makes more sense if you expect to die younger than average. Here’s how the above factors flip.
- Your parents and grandparents died younger than average.
- Your health is poor for your age.
- You smoke.
- You participate in high-risk activities.
- You never graduated from college.
- You’re African American or, more impactful, Native American.
- You’re impoverished and have poor prospects of improving your financial situation to better than average.
Your breakeven point relative to claiming at your (assumed) FRA of 67 is age 79.
Should you die younger, your lifetime benefits would be higher. Live longer, and your lifetime benefits start falling behind what you’d have had if you had claimed at your FRA.
Now we move to the less obvious.
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How Bridge Income Changes the Payoff From Delaying Social Security
According to Morningstar’s annual “State of Retirement Income” report for 2024, you get more out of delaying benefits if you have an alternate source of income that doesn’t tap your portfolio before your benefits begin.
This could be from rental properties, annuities, part-time work, royalties, etc.
The report states, “If higher early portfolio withdrawals are the retiree’s only source of cash flow until Social Security commences, that reduces the benefits of delayed filing because it leaves less of the portfolio in place to compound over the 30-year horizon.”
In numbers, assuming a starting portfolio of $1 million (invested 60 percent in equities and 40 percent in bonds) and $36k in annual FRA benefits from Social Security, claiming at FRA (assumed here to be 67) your safe Year 1 spending (assuming the 3.7 percent safe withdrawal rate the report projects for those retiring this year) would be $73k. You’d expect a lifetime spending of $2.19 million, and your median-case ending balance in Year 30 would be $1.33 million.
Say you delay claiming until age 70 but have no non-portfolio income other than Social Security, all else being equal, your safe Year 1 spending would increase somewhat, to $77k. Your expected lifetime spending would grow to $2.31 million, while your median-case Year 30 balance would drop to $1.15 million.
This is a 5.5 percent increase in spending, but a 13.5 percent drop in the median Year 30 ending balance.
However, if you can “bridge” the gap from age 67 to 70 without touching your portfolio, your safe Year 1 spending would jump to $82k, your expected lifetime spending would increase to $2.46 million, and your median Year 30 ending balance would be $1.30 million.
In other words, such bridging income increases your spending by 12.3 percent, more than double the non-bridged case. Your median Year 30 ending balance would still drop by 2.3 percent, nearly six times less than the non-bridged case.
On the flip side, claiming at the earliest point possible, age 62, reduces your spending by 13.7 percent, and your median Year 30 ending balance by 6.0 percent.
As a final note, Morningstar points out that their analysis assumed an annual inflation of 2.32 percent. Should the actual inflation run hotter, Social Security’s Cost of Living Adjustment (COLA) would make delaying and receiving a higher monthly benefit even more compelling.
What Financial Advisors Say About Delaying Social Security
I asked several financial advisors to weigh in on this topic. Here’s what they had to say.
Stephen Mazer, Principal, Senior Wealth Advisor at Rational Wealth Solutions says:
Most clients these days come in with the notion that they should delay Social Security income until age 70 to maximize the benefit. Even for people with long life expectancies, we review their income sources and illustrate the impacts of delaying or beginning Social Security income. Generally, clients with no alternative income benefit from starting Social Security as soon as they retire but clients should consider delaying if they have an alternative income source, such as the excess markets returns, they can use as income. Please keep in mind any delaying strategy should be reviewed no less than annually.
Cecil Staton, Founder of Arch Financial Planning adds:
The decision to delay or claim early depends on factors like other income sources, health, and family history. Clients often worry about missing out on benefits if they delay, but I remind them that delaying increases their monthly benefits, which can provide more financial security in later years. It often makes sense for the higher-earning spouse to delay filing to maximize benefits for the surviving spouse.
Anthony Ferraiolo, CFP®, Partner Advisor at AdvicePeriod elaborates:
Social Security is a very nuanced and personal planning topic, that needs careful consideration to illustrate the options available to those who claim it.
When I review social security, I cover the topics mentioned here but also outline the following details: (1) What is the age gap between spouses? If there is a big age gap, this also provides a benefit for delaying social security because it allows the other spouse’s benefit to grow. (2) What are your preferences? Some people aren’t optimizing for life in a spreadsheet, they’d much rather go on that big trip at age 67-70 than 71-74 when health issues could creep up. Others will want to receive what’s there, because they may have little faith in the long-term stability of Social Security (even though I’m generally optimistic about the stability of benefits). (3) What are the real numbers if you delay? Some people prefer to miss out on more funds if it means getting them sooner – everyone has a price if it could be $10-$20K more, maybe they’d claim earlier while others may have a $20K threshold to be willing to delay.
It’s also important to review the tax impact of Social Security benefits. For some people, delaying means more of their benefits could become taxable, plus they might be hit with the Medicare Income Related Monthly Adjustment Amount (IRMAA), both of which would reduce their net benefit from delayed claiming.
Our goal is to educate, illustrate, and guide clients so they understand their choices and the pros and cons of each. Looking at it from a purely spreadsheet/numbers perspective would likely encourage most people to delay until age 70 since the life expectancy tables were designed in the 1980s when life expectancy was somewhat lower.
Now, most average healthy people will likely live into their early to mid 80s so they’d eventually break even and pull ahead. As healthcare evolves, this effect could grow even more. Especially after you factor in COLA and delayed credits, folks would be hard-pressed to find such a stable increasing longevity benefit. However, it’s called personal finance for a reason, so this is a very personal decision.
Lauren Williams, CFP®, CRPC®, MBA, Co-Founder and Financial Advisor at Prosper Plan Wealth adds some very welcome news to hundreds of thousands of Americans:
There are 3,000,000 people and their spouses who need to revisit their social security claiming strategy due to the Social Security Fairness Act. The House of Representatives approved this legislation in November with the Senate approving it on December 21st completing congressional approval and needing only President Biden to sign it into law.
This Act was introduced in the House of Representatives in 2023, but its core issues simmered in Congress for over 20 years, since 2003. The Windfall Elimination Provision (WEP) and Government Pension Offset (GPO) significantly impacted many teachers, police officers, firefighters, and public servants by depriving them of crucial Social Security and spousal/survivor benefits, especially when their partners pass away first.
In financial planning, we call this ‘mortality risk’ – the risk of losing your spouse’s income and your lifestyle when your spouse predeceases you. Over the years, I witnessed firsthand how this impacts clients and how challenging it was for them. The Act does away with both of these provisions.
This development will be life-changing for the hundreds of thousands who never expected to receive these social benefits. By my initial estimate, this adjustment could increase their annual retirement income by anywhere from $6k to $44k!
Is Delaying Social Security to Age 70 Right for You?
The longer you expect to live, the more financially beneficial it would be to delay claiming Social Security benefits to age 70 (assuming your financial situation and health allow it, of course).
However, having some “bridge income” to offset the missing benefits from your FRA to age 70 turbo-charges your outcome over a 30-year retirement.
Should you have no such bridge income, your increased benefits would be significantly muted.
Frequently Asked Questions
How much do Social Security benefits increase if you delay claiming?
According to the Social Security Administration, benefits increase by up to 8 percent for every year you delay claiming past your full retirement age. Claiming before full retirement age reduces them by 5 to 6.7 percent per year. The SSA designs these adjustments so lifetime benefits come out about the same if you live exactly to your life expectancy.
What is the breakeven age for delaying Social Security until 70?
Opher estimates that if you live past about age 84, delaying from an assumed full retirement age of 67 to 70 catches up with what you would have collected by claiming at 67. Comparing claiming at 62 with waiting until 67, the breakeven is about age 79. Live longer than the breakeven and waiting wins; die sooner and claiming earlier pays more in total.
Who should consider claiming Social Security early?
Early claiming tends to make more sense if you expect to die younger than average. Factors that point that way include parents and grandparents who died young, poor health for your age, smoking, high-risk activities, no college degree and limited financial means. One advisor interviewed adds that clients without an alternative income source generally benefit from starting Social Security as soon as they retire.
Does delaying Social Security make sense if you have to draw from your portfolio to bridge the gap?
It still helps, but much less. In Morningstar’s 2024 example, delaying to 70 while living off the portfolio raised safe Year 1 spending by 5.5 percent but cut the median Year 30 balance by 13.5 percent. With bridge income from sources such as rental properties, annuities, part-time work or royalties, spending rose 12.3 percent and the median ending balance fell only 2.3 percent.
How does delaying Social Security affect a surviving spouse?
If your spouse outlives you and has a lower benefit, his or her benefit is boosted to match yours, so the size of your benefit matters for the survivor. Advisors interviewed say it often makes sense for the higher-earning spouse to delay to maximize survivor benefits, and that a large age gap between spouses strengthens the case for delaying.
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Disclaimer: This article is intended for informational purposes only, and should not be considered financial advice. You should consult a financial professional before making any major financial decisions.
About the author
Contributing Writer, Wealthtender
My career has taken some unexpected turns, from earning a PhD in experimental high-energy physics, to conducting cosmic-ray research in Antarctica, to supporting NASA projects and programs, to running my own consulting business. I also run several other small businesses and help my wife run her Marriage and Family Therapy practice.
Those experiences taught me to question assumptions, think critically, and recognize that real-world decisions of any significance rarely have simple answers that apply to everyone. Today, I bring that perspective to writing about personal finance. Drawing on my analytical background, business experience, and research, I explore financial decisions, challenge conventional wisdom, and help readers understand the tradeoffs that can affect their financial well-being. To complement my own research and experience, I also weave insights from financial professionals into my articles, drawing on their expertise and real-world experience helping clients navigate financial decisions and challenges.
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