Delay and gain: Waiting to claim Social Security reaps benefits

By Max Richtman

Deciding when to claim Social Security retirement benefits is one of the most crucial decisions a worker can make. The full retirement age for Social Security is 66 and rising to 67 soon. But you can claim benefits as early as 62 . . . or as late as 70. The longer you wait to claim, the higher the monthly benefit for the rest of your life.

The decision is so critical because the majority of beneficiaries get at least half of their income from Social Security. In the town of Washington, one in five beneficiaries rely on Social Security for at least 90 percent of their income.

The average Social Security benefit for Virginia’s 1.5 million claimants is about $1,300 per month. That figure could be higher if more workers waited longer to claim. On average, Virginia residents retire at 64, two years shy of the current full retirement age.

Let’s say Paula is a retiree in Sperryville and her benefit at the full retirement age of 66 is $2,000 a month. If she retires at age 62, her permanent benefit is reduced to $1,500. But every year she waits to claim, her monthly benefit goes up. If she delays until age 63, her permanent benefit jumps to $1,600 per month. If Paula delays claiming until 64, the benefit is $1,766. If she defers until 65, it climbs to $1,900. Of course, if Paula claims at her full retirement age of 66, she realizes her full monthly benefit of $2,000.

It’s clear that for every year that Paula can hang on and delay claiming Social Security, her benefit rises and remains at that level for the rest of her life — in addition to annual cost of living increases.

Waiting until after full retirement age can yield an even higher benefit. If Paula delays claiming past her full retirement age of 66, the benefit continues to grow every year she defers up to age 70 — at which point her monthly benefit is $2,640. Compare that to her benefit if she had claimed at 66 . . . or at 62 . . . a difference of $500 to more than $1,000 month for life. A thousand dollars more per month is a significant amount when you’re living on a fixed income.

Of course, we all know there are circumstances where delaying Social Security claiming is simply not an option — whether caring for a sick family member, loss of employment, workplace age discrimination, or coping with illness or disability. I’ve heard plenty of older workers declare that they are “just plain sick and tired of working” and can’t wait to retire. But I can guarantee they’ll be more sick and tired if they run out of money later in life.

The bottom line: if you’re healthy enough to live into your 80s and can live on work income or savings until you claim Social Security, it pays to pay wait every year you can to claim benefits . . . up till age 70.

Not only is your monthly benefit higher by waiting to claim, your annual cost of living increases, which are based on your fixed benefit amount are higher, too. That means a more generous Social Security check that’s guaranteed and indexed for inflation permanently.

The longer you wait to claim, the greater your financial security and peace of mind. And that is why the age you claim Social Security retirement benefits is one of the most important choices you’ll make in later life.

Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, has a home in Woodville

Staff/Contributed
About Staff/Contributed 4845 Articles
The Rappahannock News welcomes contributions from any and all members of the community. Email news and photos to editor@rappnews.com or call us at 540-675-3338.