Should I Take Social Security at 70?

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The question of whether or not one should take Social Security at 70 is both simple and complicated at the same time. As I walk you through the answer to this below, however, it's important to keep in mind that the age at which you elect to receive Social Security retirement benefits is personal in nature, and can only be answered by taking account of your own specific situation.

As you may know, 70 years old is the longest you can wait before applying for Social Security benefits. The most prevalent age among retirees to do so is 62, which also happens to be the earliest age at which one qualifies. After that, you're free to apply at any point up until turning 70, beyond which there's no longer any reason to defer.

The main reason to wait until turning 70 is because doing so will maximize the size of your monthly benefits. The Social Security Administration calculates your benefits as a percentage of your primary insurance amount, which is the amount that you're entitled to receive if you apply at your full retirement age -- which, at present, is between the ages of 66 and 67.

People who apply before full retirement get more checks, but the size of each one is reduced. Someone who begins receiving benefits at age 62, for instance, will receive monthly checks that are roughly 25% less than their primary insurance amount -- this assumes that your full retirement age is exactly 66. Meanwhile, people who delay applying for benefits until after reaching full retirement get fewer checks, but the size of each one is enhanced. If you wait until 70, your check could be as much as 32% higher than your primary insurance amount -- this, too, assumes that your full retirement age is exactly 66.

The Social Security Administration "actuarially adjusts" benefits in this way to ensure that beneficiaries who live to the average life expectancy of a retiree will earn the same in lifetime benefits irrespective of when they begin receiving them.

In terms of making the decision about when to apply, it's important to point out that the age at which a person elects to receive benefits is first and foremost a function of need. If you need the benefits to pay your bills before you turn 70 -- or, for that matter, before you reach your full retirement age -- then you should take them. They are, after all, no more than the accumulated proceeds of your own contributions through the years by way of employment taxes.

If you don't need them, however, then there are two other factors to take into consideration. The first is whether or not you have a spouse or other dependent that will be entitled to the benefits after you pass away. In that case, waiting may be in their best interest, as they'll benefit directly from the larger checks.

Of equal significance is your anticipated lifespan. As already noted, the Social Security Administration has designed its benefit formula around the average life expectancy of American retirees -- that is, people who have already reached the age of 65. According to its math, the average male, upon reaching age 65, will live an additional 19.3 years (84.3 years old). The average female, by contrast, is expected to live an additional 21.6 years (86.6 years old).

Generally speaking, then, if it seems likely that you'll exceed the applicable life expectancy based on your gender, then it would behoove you to wait -- and, if possible, up until the age of 70. But if you aren't as optimistic about your lifespan, then you'd be better off, in terms of lifetime benefits, by taking them earlier.

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