3 Reasons It's Smart to Wait Until Age 70 to Take Social Security Benefits

By Markets Fool.com

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When do you plan to file for your Social Security benefits? You can start collecting as early as age 62, or you can wait until as late as age 70. While there are benefits to either choice, you consider these three great reasons to consider waiting as long as possible.

Dan Dzombak
The biggest reason to claim Social Security at age 70 is the higher monthly payments you'll get for delaying your benefits.

Based on your work history, you're entitled to a monthly Social Security payment called your "primary insurance amount." This is the amount you receive each month if you claim Social Security at your "full retirement age," which is 66 for those who were born between 1943 and 1954, 67 for those born in 1960 or later, and somewhere in the middle for those born between 1955 and 1959.

For every year you defer taking Social Security benefits past your full retirement age, your benefit payments increase by 8%. For those with a full retirement age of 66, this means your benefits can be 32% higher if you claim at age 70 than they would be if you claimed at age 66. For example, if you're entitled to a primary insurance amount of $1,000 at age 66, your potential benefit payments will vary as follows:

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In an age when healthcare is seeing major technological improvements -- and huge price increases -- every year, do your future self a favor and wait to claim Social Security benefits.

Matt Frankel
One of the best reasons to wait until you're 70 to start collecting Social Security is if you have good reason to believe that you'll live significantly longer than the average life expectancy.

According to the Social Security Administration's actuarial tables, the average 66-year-old man is expected to live another 16.8 years, while the average 66-year-old woman is expected to live another 19.4 years. Average 70-year-old men and women are expected to live another 14.1 and 16.3 years, respectively, which is why payments get higher the longer you wait. Theoretically, you should end up collecting roughly the same total amount no matter when you begin to collect your benefits.

However, if you're in exceptionally good health or have a family history of longevity, it may work out in your favor to wait to collect benefits.

Just as one example, if your standard retirement benefit at 66 is $1,000 per month, that means you could get $1,320 per month by waiting until age 70. By the time you reached age 81, your total benefits would have surpassed the total benefits you would have received by claiming Social Security at age 65. And if you lived to 90, you'd collect $38,400 more over your lifetime by delaying benefits until age 70.

Dan Caplinger
As Matt points out, those who expect to live for a long time clearly benefit by waiting to take Social Security in exchange for higher benefits. But even those who aren't so optimistic about their own longevity prospects can do their loved ones a big favor by delaying their Social Security.

The Social Security Administration calculates the survivor benefits that a surviving spouse and eligible children are entitled to receive by referring to the deceased worker's benefit amount. In making that calculation, the SSA accounts for any delayed-retirement credits that the deceased worker earned by waiting beyond full retirement age to take payments. As a result, if you wait until 70, not only will your benefits be 32% higher than they would be if you took them at 66, but the survivor benefits your loved ones receive will also be correspondingly higher. If your spouse ends up living a long time, then delaying benefits can substantially increase the total amount that your family as a whole receives from Social Security. This is just one more example of how Social Security's rules are so complex that it's important to work through all the ramifications of your decisions so you don't make a choice you'll later regret.

The article 3 Reasons It's Smart to Wait Until Age 70 to Take Social Security Benefits originally appeared on Fool.com.

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