5 Reasons Your Shouldn’t Start Collecting Social Security Until Next Year

Big changes are coming to Social Security in 2025, but even if they don’t apply to you, it could make sense to wait another year to claim your benefits, even if you’re eligible to collect today.

GOBankingRates spoke with several experts, who outlined why some retirees could increase their monthly payments, secure their financial futures and reduce their tax burden by resisting the urge to collect their hard-earned benefits before 2024 comes to a close.

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If You Haven’t Reached Full Retirement Age, It Pays To Wait

According to the Social Security Administration, “a benefit is reduced 5/9 of 1% for each month before normal retirement age, up to 36 months. If the number of months exceeds 36, then the benefit is further reduced 5/12 of 1% per month.”

In short, if you didn’t reach your full retirement age in 2024, it probably makes sense to wait until 2025 to claim your benefits, unless you absolutely can’t get by without them until then.

“As an estate planning attorney with over 40 years of experience helping clients plan for retirement, delaying Social Security benefits is often the wisest choice,” said Fritch Law Office founder David P. Fritch, CPA, PC.

You can claim as young as 62, but you’ll forfeit a big chunk of your monthly benefit if you do — and once the checks start coming, there’s no changing your mind later down the road.

“Claiming early at age 62 reduces your benefit by up to 30%,” said Nischay Rawal, CPA, who has more than 10 years of experience helping clients plan for retirement as the founder of NR Tax and Consulting . “While you get benefits for longer, you receive less each month, and it often takes 12 to 15 years to break even. For healthy retirees with a long life expectancy, the higher benefit from delaying is usually the better choice.”

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If You’re Not Yet 70, You Can Keep Growing Your Check

Just as the SSA penalizes retirees who claim their benefits early, it rewards those who wait with delayed retirement credits.

“The benefits increase by about 8% each year between your full retirement age — currently 66 or 67 — and 70,” said Fritch. “For example, if your benefit at 66 is $1,000 per month, at 70, it would be $1,320 a month. If you live to 85, that’s an extra $69,000.

“For most, Social Security is a major source of income, so maximizing it is key. While four or five years may seem like a long time to delay, the permanently higher benefit and additional lifetime income often make it worthwhile.”

One Extra Year Can Buy Retirees Financial Security for Life

You don’t need to hold out for four or five years as Fritch suggested. Waiting just until this time next year would lock in your extra 8% for life — and that extra 8% can buy you priceless security and peace of mind.

“Some clients worry about not living long enough to recoup the benefits of waiting,” said Fritch. “However, a higher benefit provides better protection against inflation and market volatility, which threaten income and savings.”

This is especially true for those who have someone who will depend on their benefits after they’re gone.

“For married couples, the higher benefit of one spouse is even more important, as it will continue providing income for the surviving spouse,” said Fritch.

Waiting Could Make Tax Time Much Easier

Depending on your income level and where you live, you might have to pay taxes on part of your Social Security benefits at both the state and federal levels.

By claiming now, you could inadvertently increase your tax bill and reduce the purchasing power of your benefits. However, if you wait until 2025, you’ll have until 2026 to plan and prepare for the tax implications.

“If your Social Security earnings are taxable, you can keep them off this year’s tax obligations by waiting until January,” said Melanie Musson, financial expert with InsuranceProviders.com .

Age Thresholds Will Change in 2025

The SSA has announced plans to “increase the earliest eligibility age (EEA) by two months per year for those age 62 starting in 2025 and ending in 2042 (EEA reaches 65 for those age 62 in 2042)” and “increase the normal retirement age (NRA) and the earliest eligibility age (EEA) for those age 62 in 2024-2025 to 68 and 63, respectively, and then by three months per year in 2026-2029 to 69 and 64, respectively.”

If that applies to you, waiting might be your best — or only — option.

“Since the retirement age will increase in 2025, some retirees may decide to wait to claim benefits until they reach the age increase threshold,” said Musson.

This article originally appeared on GOBankingRates.com : 5 Reasons Your Shouldn’t Start Collecting Social Security Until Next Year