Know Your Life Expectancy - The Key to Knowing When to Collect Social Security

Ask Rusty – Should I Wait Until Age 70 To Claim?

Dear Rusty: I have read your answers to the commonly asked question of "When should I claim social security benefits." You always say one should wait as long as possible (up to age 70) to get the maximum monthly benefit. But I have not seen you address the matter of all the money you could have collected if you start drawing sooner and how many years it will take, if you wait, to recoup all that money.

I am now 64. I have always planned to wait until at least 66 and possibly to 70 to start collecting. I have no health issues and expect to live well into my 90's. When I tell people this, they question why I am leaving so much money on the table by waiting. At age 66 I'd get $1671 per month and, at 70, $2161. Between those two ages I could collect $73,524. It will take me many years to recoup all that money if I wait until 70 to begin, right? When I consider this, I question why I am waiting! Please help clear up my confusion and tell me whether I am doing the right thing by waiting to claim. Signed: Confused Senior

Dear Confused: You are correct that I always try to make people aware of their option to get a bigger Social Security benefit by waiting longer to claim. But I also always stress that the decision to do that should consider several things - most notably, current need for the money, health, and anticipated longevity. Said another way, delaying until age 70 doesn't make much sense if you won't live long enough to at least "break even." Nevertheless, your point is very well taken – not a lot is written about benefits not taken when you wait until a later age to claim. I actually have written about that before, but I'm happy to evaluate your specific personal situation.

Using the numbers you provided, if you were to claim your $1671 benefit starting at your full retirement age (FRA) you would collect $73,524 over the 44-month period to age 70, when you could get the $2161 benefit. So how long would it take to break even if you wait until age 70 to claim? Well, the difference between your age 70 benefit and your FRA benefit is $490. So, if you wait and get the higher benefit at age 70, it will take you about 12.5 years to recover that $73,524 ($73,524 divided by $490 = 150 months = 12.5 years). So, here's where longevity comes in. According to Social Security, average longevity for a man your age today is about 84, so if you meet or exceed average longevity, you'll collect more in cumulative lifetime benefits by waiting until age 70 to claim. And you'll be getting that higher monthly benefit amount throughout your later years, a good way to offset inflation. Indeed, that higher benefit lasts for the rest of your life, and it also means a larger survivor benefit for your wife if you predecease her. As your widow, your wife will get 100% of the amount you are receiving when you pass, if she has reached her full retirement age and if her widow's benefit is more than her own. And 100% of your age 70 benefit is quite a bit more than 100% of your earlier benefits.

I hope this helps clarify your confusion about whether to claim now, or at your FRA, or to wait even longer to age 70. Here is a link to an article I previously published on this topic: http://www.socialsecurityreport.org/ask-rusty-doing-a-breakeven-analysis/. But from what you've shared with me, I don't see anything wrong with your plan to continue waiting until at least your FRA - and possibly until age 70 - to claim, especially since you expect to live well into your 90s.

This article is intended for information purposes only and does not represent legal or financial guidance. It presents the opinions and interpretations of the AMAC Foundation's staff, trained and accredited by the National Social Security Association (NSSA). NSSA and the AMAC Foundation and its staff are not affiliated with or endorsed by the Social Security Administration or any other governmental entity. To submit a question, visit our website (amacfoundation.org/programs/social-security-advisory) or email us at ssadvisor@amacfoundation.org.