3 Undeniable Reasons to Take Social Security at Age 70 – Even if You Need the Money Sooner

Social Security benefits become available at 62, but if you claim them before 70, you could regret it.

Of course, if you need the money from Social Security to retire, delaying for an extra eight years may seem undesirable, if not downright impossible. But the reality is, there are some very good reasons to delay claiming your benefits until 70.

Here are three undeniable reasons why waiting can absolutely pay off and is worth doing if there’s any way at all that you can make it happen.

1. Delaying gives you a guaranteed 8% ROI

One of the single biggest reasons to delay Social Security is that the payoff of waiting can be huge. Once you reach your full retirement age, your benefits increase for every month that you wait to claim them until age 70. The benefits increase isn’t a small one either. It’s 2/3 of 1% per month, which adds up to 8% per year.

This 8% ROI is risk-free. If you wait, you’re going to get it every year without question. This may not seem like much, but the cumulative effect is pretty impressive. If you were on track for a standard benefit of $2,000 at 67, a 24% increase from delaying until 70 will bring that up to $2,480.  That’s $5,760 extra every year for life. To get an extra $5,700 in income from a 401(k), assuming a safe 4% withdrawal rate, you’d need to add an extra $144,000 to your account.

Plus, because your bigger benefit will lead to larger future Social Security raises (since cost of living adjustments are awarded based on a percentage of your current benefit), your decision to delay will keep paying off for the rest of your life.

2. A higher Social Security benefit provides crucial financial security as you age

There’s another big reason to delay your claim. Your Social Security benefits are guaranteed to last. Whether you live until 85 or 105, your benefits will keep on coming. Having a larger check deposited late in retirement when your savings may be starting to dwindle is going to be a huge relief.

Managing investments, safe withdrawal rates, and worry about potential market crashes in your 80s and 90s isn’t something most people are excited about. While you’ll still ideally have enough money left in your retirement accounts to produce some supplementary income to add to your Social Security, you won’t have to rely nearly as much on diminishing retirement accounts if you’ve grown your Social Security check as much as possible.

3. A bigger Social Security benefit provides protection against poor stock market returns

Finally, a bigger Social Security check provides you with more of a buffer against poor stock market returns.

The reality is that the 4% rule for safe withdrawals was based on outdated assumptions and past performance of the market, and most experts project that returns in the future will be lower. If your investments don’t perform as well as you had hoped throughout your retirement, you’ll be grateful that you waited to claim Social Security and have more guaranteed, inflation-protected income coming from Uncle Sam.

It’s worth noting that the National Bureau of Economic Research has estimated that over 90% of current workers should wait until age 70 to optimize their Social Security, and doing so would give them a 10.4% increase in their lifetime spending.  If the stock market disappoints you, having a much bigger Social Security check to fill the gap is going to make your retirement a whole lot more comfortable.

So, while delaying your Social Security claim until 70 may feel like a big financial burden, especially if you feel like you need the money sooner, it may be a burden worth taking on for the big payoff that comes later in life when you need the money the most.