Broker Check

Delaying Social Security Benefits

October 12, 2020

Many retirees face the question of when they should start drawing their Social Security benefits. The monthly amount paid in Social Security benefits can increase by as much as 8% each year a person  delays receiving benefits, up until they reach age 70. While retirees can start receiving reduced benefits as early as Age 62, Full Retirement Age (FRA) for many will range between Ages 66 – 67. 

There are many factors to consider before electing to claim your benefits including your current income, cash flow needs, family needs and family longevity.  The benefits of claiming benefits early can include increased current cash flow, enjoying it while younger and healthier, and gifting or reinvesting the income to benefit a surviving spouse or the next generation.

On the other hand, delaying benefits may yield the highest total payout over a beneficiary’s lifetime. This can be of value, especially for individuals who expect to have a longer life expectancy based on family history and health status. In addition, if the cash flow is not needed it may be more advantageous to delay benefits in an attempt to capture the higher estimated lifetime payout rather than collect benefits early to invest the money at today’s low interest rates.