Maximizing Your Social Security: The Benefits of Delaying for a Stronger Retirement

One of the most important decisions you'll make as you approach retirement is when to start collecting Social Security benefits. While you can begin as early as age 62, waiting until a later age to claim your benefits can provide significant financial advantages. At Van Hulzen Financial Advisors, we believe that understanding the long-term impact of this decision is crucial to your financial well-being. Let’s explore why waiting might be the right choice for you.

How Social Security Works: The Basics

Your Social Security benefit is calculated based on your highest 35 years of earnings and is intended to replace part of your pre-retirement income. However, the age at which you choose to claim these benefits plays a major role in determining the monthly amount you’ll receive.

If you begin collecting at age 62, your benefit will be permanently reduced by up to 30% compared to what you’d receive at Full Retirement Age (FRA)—which is between 66 and 67, depending on your birth year. On the other hand, waiting beyond your FRA allows your benefits to grow by approximately 8% per year, thanks to Delayed Retirement Credits (DRCs), until you reach age 70.

The Power of Delayed Retirement Credits (DRCs)

By waiting until age 70 to begin collecting Social Security, you can significantly increase your monthly benefit. For each year you delay past your FRA, your benefit increases by about 8%, which could result in a boost of up to 32% more than what you would receive at FRA.

For example, if your FRA benefit is $2,000 per month at age 67, waiting until age 70 would increase your monthly payment to $2,640. Over the course of your retirement, this additional income can make a substantial difference, especially if you anticipate a long retirement or have a spouse who may depend on survivor benefits.

Visualizing the Benefits of Waiting

To further illustrate the advantages of waiting to claim Social Security, take a look at the chart below. This graphic shows how much more of your FRA benefit you can receive by delaying from age 62 up to age 70.

As the chart shows, taking benefits at age 62 results in receiving only 70% of your full retirement benefit. But by waiting until age 70, you could receive 124% of your full benefit—offering a significant financial advantage over time.

Longevity: A Key Consideration

One of the main factors to consider when deciding when to claim Social Security is longevity. The longer you expect to live, the more beneficial it is to delay your benefits. While it’s impossible to predict the future, looking at family history, health, and lifestyle choices can help you make an informed decision.

By waiting, you are effectively buying longevity insurance—ensuring that your Social Security payments are as high as possible during the later stages of life when you might need them the most.

Inflation Protection: The Role of COLAs

Another advantage of delaying Social Security is that your increased benefit will also be subject to annual Cost-of-Living Adjustments (COLAs), which help protect your purchasing power as prices rise. While COLAs are applied whether you claim at 62 or 70, the larger benefit you receive by waiting will result in a more significant adjustment each year. This means your future income will be better protected against inflation.

Maximize Survivor Benefits

For married couples, waiting to claim Social Security can also enhance survivor benefits. If the higher-earning spouse delays claiming until age 70, the surviving spouse will receive a larger monthly benefit upon the higher earner's death. This can be an important factor in ensuring financial stability for the surviving spouse later in life.

When It Makes Sense to Wait

Waiting to claim Social Security is a personal decision, but it can be especially beneficial for those who:

• Are in good health and expect to live into their 80s or beyond.
• Have other sources of income to rely on in the early years of retirement.
• Are concerned about outliving their savings and want to maximize their guaranteed income later in life.

Next Steps: Let Us Help You Make the Right Decision

At Van Hulzen Financial Advisors, we understand that deciding when to take Social Security is just one part of a broader retirement strategy. We’re here to guide you through this decision and help you evaluate how it fits into your overall financial plan. By reviewing your specific situation, we can help you determine whether delaying Social Security is the right choice for you.

We encourage you to reach out for a personalized review of your retirement options and Social Security benefits. Let us help you make the most of your hard-earned retirement savings and create a plan that supports your long-term financial goals.

Helpful Resources For more information on Social Security benefits and tools to estimate your payments, visit the Social Security Administration’s website or try the Retirement Estimator Tool to see how your benefits change based on different claiming ages.

As always, we recommend reviewing all of your financial matters with a professional financial advisor. Our team is here to help you make informed decisions that ensure a secure and fulfilling retirement so that you can focus on what matters most. 

*The foregoing content reflects the opinions of Van Hulzen Asset Management DBA "Van Hulzen Financial Advisors" and is subject to change at any time without notice. Content provided herein is for informational purposes only and should not be used or construed as investment advice or a recommendation regarding the purchase or sale of any security. There is no guarantee that the statements, opinions, or forecasts provided herein will prove to be correct. Past performance may not be indicative of future results. Indices are not available for direct investment. Any investor who attempts to mimic the performance of an index would incur fees and expenses which would reduce returns. Securities investing involves risk, including the potential for loss of principal. There is no assurance that any investment plan or strategy will be successful.