Why it makes sense for Social Security recipients to claim benefits at 70

MANY Americans put countless numbers of hours into work before the time finally arrives to claim Social Security – but it might make sense to hold off a little longer before first eligible.

As soon as you hit 62, you can start enjoying Social Security benefits.

However, for many, it might not be in the best interest to claim that early because you’ll see a significant reduction to your benefits compared to if you hold off a few more years.

And there might be other reasons why you might want to consider waiting until 70

We explain them down below.

You recently got a higher paying job

Some of how much you earn in Social Security checks is weighed by your earnings history.

If you haven’t earned a lot in your working history, and you just got a better-paying job - it would make sense to continue to build up your benefits.

Currently, the maximum taxable wage is $142,800 in 2021 – but that will be boosted to $147,000 next year. 

Once your earnings exceed that wage cap, you don't get taxed on it for Social Security.

Also, many employers have been boosting wages in efforts to lure workers in the past year or so.

So now might be a good opportunity to improve your earnings history.

You want to or need to work more

If you have no desire to stop working currently, then by all means continue working.

Others, meanwhile, may not have worked long enough to get the maximum Social Security check.

To be eligible for the maximum benefit, you need to work for at least 35 years.

If you don’t work at least 35 years, zeros will be average into your calculation for each year you're missing income.

This will of course leave you with lower benefits.

Not enough saved for retirement

A mistake many Americans make is thinking Social Security will be enough for them once they are ready to retire.

But the truth is Social Security benefits are only meant to replace about 40% of your pre-retirement income on average. 

Some argue you’ll need around $2million to retire comfortably. 

If you are nowhere close to that threshold, then take the opportunity to continue working and save as much as possible.

Some common retirement accounts include 401ks and individual retirement accounts (IRA). 

You want to get 132% of the monthly benefit

But the biggest reason why it makes sense to wait until 70 before claiming Social Security is the boost you get for delaying that long.

If you claim at 62, you could see your benefits reduced as much as 30%, according to the Social Security Administration.

If you wait until your full retirement age, you’ll get 100% of your monthly benefit if you start claiming then.

If you delay benefits for an additional 12 months, you’ll receive 108% of the monthly benefit and if you wait until 70, you'll receive 132%.

If you fully take advantage of everything from your work and earnings history to delaying your claim – it’s possible you can earn the maximum Social Security benefit.

In 2022, the maximum benefit will be boosted to $4,194 a month.

We explain how much you’ll lose by withdrawing from your retirement accounts too early.

We explain five things you need to do before claiming Social Security.

And find out how working while collecting Social Security impacts your benefits.