If you hope Social Security will help you achieve financial security as a retiree, you'll need to make smart choices about when you file for your benefits to begin. Your decision on this issue can profoundly impact the monthly income that your benefit checks provide.
In fact, with one simple move, the typical retiree could add over $1,000 to the monthly payment the Social Security Administration provides. Here's what you'd need to do, along with some details on why making this move is often the best choice for most seniors.
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This one choice could add $1,000 to your Social Security benefits check
If you're in line for the typical retirement check and you want to add $1,000 to the amount you get, you can do that if you put off claiming your benefit until age 70. Delaying the start of your payments will significantly increase your monthly checks because you'll avoid early filing penalties and max out delayed retirement credits that are built into the Social Security benefits program. These penalties and credits exist because seniors have a choice to claim their first payment any time between the ages of 62 and 70, and the goal is to get them the same lifetime benefits no matter if they claim early or late.
Delaying your payment can have a much bigger impact than you'd think. Let's say you're in line for the average benefit, which is $1,918 per month as of 2024, according to the Social Security Administration. Let's also assume your full retirement age (FRA) is 67. FRA is the age when you get to claim your standard benefit as calculated based on your work history. It used to be 65 but it's been gradually moving later and is 67 for anyone who was born in 1960 or after.
If you claim your benefits at the youngest allowable age of 62, you will be hit with the maximum amount of early filing penalties. Those reduce benefits by 5/9 of 1% per month for the first 36 months and 5/12 of 1% for any month before that. Claiming payments five full years early results in a 30% reduction to your monthly benefit, leaving you with just $1,342.60 per month if you'd have received the average $1,918 at FRA.
If you instead waited until 70, which is the age when you stop earning credits for any further delays, then you could instead increase your $1,918 monthly benefit. You'd earn the maximum three years of delayed retirement credits, which add two-thirds of 1% per month to your benefits -- or 8% annually. You'd end up with a 24% increase to your standard $1,918 benefit and your check total would be $2,378.32.
Your choices here would add $1,035.72 per month to your Social Security payment. You'd get that extra money for the rest of your life after starting your Social Security payments when you hit 70. That's a lot of extra money with which to support yourself as a senior.
Should you delay your claim for benefits to get an extra $1,000 per month?
For many retirees, it makes good sense to put off your benefits claim to get an extra $1,000 in monthly retirement income. Not only do you increase your payments late in life when you may need the money the most, but studies have also shown that waiting until 70 results in the most lifetime benefits for the majority of seniors. That's because most people live longer than the life expectancies used to create the system of delayed retirement credits and early filing penalties since life spans have lengthened since Social Security was created.
Of course, there are some exceptions. If you're in poor health, for example, then you may lose out on money by waiting to claim since you could die before you start your benefits or before you earn enough extra Social Security income to make up for missed years of checks. For most people, though, delay pays off big-time and, if you can make it work financially, you can get a ton of extra money in your check by making the choice to wait.
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