Ask Stacy: Do I Really Need to Wait Until Age 70 to Collect Social Security?

Senior Couple
Photo by Goodluz / Shutterstock.com

For many of us approaching retirement, collecting the maximum possible from Social Security will mean the difference between a comfortable retirement and a coupon-clipping, austere budget in our golden years. So it’s critical to understand how our national retirement system works, and the ways it can be used to better serve us as individuals.

Here’s this week’s reader question:

Why do you and others keep telling people to wait until 70 to collect Social Security? If you can afford to retire at 62, you will have eight years of good retirement that you wouldn’t have otherwise. In the meantime, the money you would have taken from your investments has additional years of growth. The longer you wait for retirement, the worse your health will be. — Ted

Ted’s right. I do often say to wait till 70 to take Social Security. For example, here’s a video we did a while back called “How to Get More Social Security.” You’ll note waiting is one of the things I suggest.

Now, on to Ted’s question:

No advice is one-size-fits-all

James Withers was my oldest friend. The only people I knew longer were my parents and sister.

A few years ago, when James was 58, he discovered he was eligible for a small pension from a long-ago stint as an elevator repairman. He called to ask my advice about the two options he was presented: a small monthly check now, or a significantly larger one when he turned 65.

Based on the advice I’ve offered about Social Security, you’d assume I told James to wait until 65. I didn’t. I told him to take it ASAP. Why? First, at the time he didn’t have two nickels to rub together. Next, his father had died at a young age, his mother had died fairly young, and his three siblings were also gone. So his odds of a long life were slimmer than most, especially considering his lifestyle wasn’t the healthiest. Last but not least, he’d recently suffered a heart attack.

Last spring I gave the eulogy at James’ funeral. I miss him. And I’m very glad I didn’t advise him to wait for his money.

The point here is that while people like me use broad strokes to address mass audiences, we’re all different, and we shouldn’t all do the same thing. Some of us will die younger, and therefore should take as much as we can get as early as we can get it. Some of us will become too frail to enjoy life at 70. Some of us have jobs we can’t wait to quit, while others can’t imagine ever quitting. Some of us have substantial nest eggs, some of us don’t.

Forget the math

If you take Social Security when you turn 62, you’ll get 25 percent less than if you wait until you turn 66. If you wait until 70, you’ll get 32 percent more than if you took your benefits at 66, and 76 percent more than you’d have gotten at 62.

But here’s something important. Theoretically there should be no difference between these options; you should receive the same basic lifetime amount under all three.

The government doesn’t reward you for waiting or penalize you for starting early. They’re simply attempting to pay you what you’re owed over your lifetime. Doing that requires smaller checks for a longer period if you take it early or larger ones for a shorter period if you wait.

So when Ted says, “If you can afford to retire at 62, you will have eight years of good retirement that you wouldn’t have otherwise,” he’s absolutely right, provided the income you’ll receive at 62 will be enough to live on for the rest of your life.

He also says, “In the meantime, the money you would have taken from your investments has additional years of growth.” Also true. But that assumes that those not retiring at 62 are depleting, rather than adding to, their investments. If you keep working past 62, the paychecks you’re getting should be keeping you alive and building your savings.

So here’s the bottom line: My hope for Ted, and for you, is that you retire whenever you want to. If you want to stop working and can enjoy a quality retirement by taking your Social Security when you’re 62, please do. And if you expect a shorter life than most, or face poor health in your retirement years, definitely take the money and run.

Now, here are some tips to maximize your Social Security.

1. Work at least 35 years

Social Security benefits are calculated based on your 35 highest-earning working years. If you work fewer years, you’ll have years with zero income averaged in, which will lower your payout.

2. Ask for a raise

The more you make while working, the more you’ll make in Social Security, to a limit. So make as much as you can. Getting a second job is another way to accomplish the same thing.

3. Use online tools

If you’re unsure about the best time to claim benefits based on your individual budget, health, life expectancy or other factors, use online resources to help you decide. A good place to start is SocialSecurity.gov/MyAccount, where you’ll get your personalized statement. This estimates what your benefits will be at age 62, at full retirement age, or at age 70.

Once you get estimates for both you and, if applicable, your spouse, there are other online tools that compare your benefits under various scenarios to help you determine the best claiming strategy. AARP has a Social Security Benefits Calculator. Another option is to get a personalized analysis and claiming strategy. We can hook you up with that on this page of our Solutions Center.

4. Claim spousal benefits

If you’re married, you have a choice: You can either take the benefit based on your work history, or half your spouse’s benefit. So if your spouse earned a lot more than you did, and has a higher benefit as a result, compare and see which will pay the most.

You can also claim Social Security benefits based on an ex-spouse’s work record if you were married for at least 10 years. Doing so doesn’t reduce their check or otherwise impact them. In fact, they’ll never know you applied.

Again, if you’d like a personalized plan that will reveal the claiming option that will net you the most money, you’ll find it here.

5. Plan ahead for taxes

If the sum of your adjusted gross income, nontaxable interest and half your 2016 Social Security benefits exceeds $34,000 ($44,000 for couples), up to 85 percent of your benefits may be taxable. You can minimize this expense by using certain tax-saving moves, such as investing in annuities that allow you to earn interest that isn’t taxed until you withdraw it.

6. Clear your debts

Your Social Security benefits are protected from most debt collections, but they can be taken to collect unpaid federal taxes, federal student loan balances and child support or alimony. Clearing these debts will leave your Social Security benefits untouched.

What’s your strategy for claiming Social Security benefits? Have you decided? Share your thoughts in comments below or on our Facebook page.

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter. If you’re not subscribed, fix that right now by clicking here.

The questions I’m likeliest to answer are those that will interest other readers. In other words, don’t ask for super-specific advice that applies only to you. And if I don’t get to your question, promise not to hate me. I do my best, but I get a lot more questions than I have time to answer.

About me

I founded Money Talks News in 1991. I’m a CPA and have also earned licenses in stocks, commodities, options principal, mutual funds, life insurance, securities supervisor and real estate. I’ve been investing in both stocks and property for more than 35 years.

Got some time to kill? You can learn more about me here.

Got more money questions? Browse lots more Ask Stacy answers here.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
5 Ways Social Security Will Change in 2021
5 Ways Social Security Will Change in 2021

These adjustments will affect both workers and retirees in the new year.

8 Secrets of an Expert Thrift Store Shopper
8 Secrets of an Expert Thrift Store Shopper

Here’s how a veteran thrift shopper scores the best deals — and turns a profit from them.

8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

7 Big Purchases You Should Never Make
7 Big Purchases You Should Never Make

Sometimes a big-ticket purchase is nothing more than a big waste of money.

5 States Where Drivers Pay the Most for Car Insurance
5 States Where Drivers Pay the Most for Car Insurance

Auto insurance will cost you more than three times as much in one state compared with another. Here’s how to lower your rates no matter where you live.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
7 Kirkland Signature Items to Avoid at Costco
7 Kirkland Signature Items to Avoid at Costco

Even if it seems you save a bundle buying Costco’s Kirkland Signature brand products, they may not be the bargain they appear to be.

How to Buy Gas At Costco Without a Membership
How to Buy Gas At Costco Without a Membership

The warehouse club often has some of the cheapest gas in town. Here’s how you can get it as a nonmember.

10 Things to Stop Buying If You Want a Clutter-Free Home
10 Things to Stop Buying If You Want a Clutter-Free Home

If you like to keep things simple, avoid these purchases.

If You Find This Thrift Shopping, Buy It
If You Find This Thrift Shopping, Buy It

Vacuums from this brand can last a half-century, if not longer — and they’re hot on the resale market.

A Simple Way to Silence Robocalls Today
A Simple Way to Silence Robocalls Today

A few steps can keep your phone from ringing when a spammer calls.

This Company Makes the Best Tires in America
This Company Makes the Best Tires in America

Driver satisfaction with tires is at an all-time high, but one brand stands out.

This Health Issue Can Hint at Dementia Years in Advance
This Health Issue Can Hint at Dementia Years in Advance

One type of pain is especially associated with cognitive decline.

Can I Switch to Spousal Social Security Benefits When My Ex Dies?
Can I Switch to Spousal Social Security Benefits When My Ex Dies?

Knowing when to claim can help you maximize benefits.

Medicare Will Not Cover These 6 Medical Costs
Medicare Will Not Cover These 6 Medical Costs

Don’t let these health care expenses catch you off guard in retirement.

8 Things You Should Always Buy on Amazon
8 Things You Should Always Buy on Amazon

The giant retailer shines when it comes to these things, from basics to hard-to-find specialty goods.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

12 Deep Discounts Available on Amazon This Friday
12 Deep Discounts Available on Amazon This Friday

These items are steeply discounted — but the deals won’t last long.

5 Ways to Fill Your Pantry With Free Food
5 Ways to Fill Your Pantry With Free Food

Anyone can take advantage of these resources.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

6 Reasons You Should Stop Hiding Cash at Home
6 Reasons You Should Stop Hiding Cash at Home

Stashing money around the house is anything but harmless.

5 States With the Worst Health Care for Retirees
5 States With the Worst Health Care for Retirees

All of these states are located in the same region of the nation.

36 Things That Will Be Obsolete Soon
36 Things That Will Be Obsolete Soon

The writing is on the wall for dozens of things we have grown up with.

5 Products You Should Never Buy Generic
5 Products You Should Never Buy Generic

Sometimes the brand-name version is clearly superior.

Beware This Hidden Ingredient in Rotisserie Chicken
Beware This Hidden Ingredient in Rotisserie Chicken

Something foul may lurk in those delicious, ready-to-eat birds.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.