Quick overview
Delaying Social Security means you postpone starting your retirement benefit beyond your full retirement age (FRA) and up to age 70. For most people, delaying increases the monthly benefit through delayed retirement credits (about 8% per year) and can improve lifetime income, spousal benefits, and survivor protections. But it also means foregoing income for the years you delay and raises trade-offs related to health, life expectancy, taxes, and work income rules (earnings test) (Social Security Administration: Planning for Retirement – https://www.ssa.gov/benefits/retirement/).
Below I explain the pros and cons, walk through a break-even analysis with examples, and offer practical strategies I use in client planning. This article is educational and not personalized financial advice—consult a qualified planner or tax advisor for your situation.
How delayed credits work (the math in plain language)
- If you wait past your FRA to claim, the Social Security Administration (SSA) awards delayed retirement credits that increase your benefit up until age 70. For most people these credits equal roughly 8% per year of delay (SSA: Delayed Retirement Credits – https://www.ssa.gov/benefits/retirement/planner/delay.html).
- The increase is applied to your Primary Insurance Amount (PIA), which is the benefit you would receive at FRA. The boost is permanent — once you hit age 70, there’s no further gain for waiting.
Example (simplified):
- FRA benefit (PIA) at 67 = $2,000/month.
- If you wait to 70 (three years), your benefit might be about $2,000 × (1 + 0.08 × 3) = $2,480/month (approximately). The exact calculation uses month-based credits; use the SSA calculators for precise numbers.
Pros of delaying Social Security
- Larger guaranteed monthly income
- Each year of delay increases your permanent monthly benefit. That higher baseline can reduce longevity risk—the danger of outliving your assets.
- Better survivor/spousal protection
- A larger worker benefit can lift spousal and survivor benefits, giving a surviving spouse a higher floor of income.
- Higher inflation-protected payments over time
- Social Security benefits are adjusted for inflation via COLAs. A higher starting benefit compounds with COLAs.
- Flexibility for retirement cash flow planning
- Waiting can let you use other assets (savings, part-time work, Roth distributions) early in retirement and preserve the guaranteed Social Security income for later years.
- Simple, low-risk return in many cases
- For someone who lives past the break-even age, the internal rate of return on delaying can be attractive compared with safe bond returns.
Cons of delaying Social Security
- Lost income in early retirement years
- You forgo benefits between the time you could have started and the time you actually do. If you rely on that money for living expenses, delaying might be impractical.
- Health and mortality risk
- If you have a shorter-than-average life expectancy due to health or family history, the break-even age may never materialize.
- Opportunity cost and liquidity
- Larger future benefits aren’t liquid cash today. If you need funds for long-term care, medical bills, or debt, waiting may be costly.
- Rules if you keep working
- If you claim before FRA and keep working, your benefits can be reduced under the SSA’s earnings test until FRA. These withheld benefits are later recomputed into a higher monthly benefit once you reach FRA, but this can still complicate planning (SSA: Retirement Planner).
- Tax considerations
- Larger benefits can increase the portion of Social Security subject to federal income tax and affect Medicare premiums (IRMAA). Consider the interaction with taxable retirement account withdrawals.
Break-even analysis: how to decide
A break-even analysis compares cumulative benefits received under two claiming ages and identifies the age at which the total payments are equal. After the break-even point, the strategy that delayed benefits yields more cumulative income.
Simple formula (monthly example):
- Let B1 = monthly benefit if you claim at earlier age (e.g., FRA or 62).
- Let B2 = monthly benefit if you delay to later age (e.g., 70).
- Let Y = years between the two claim start dates.
Break-even months = (B2 − B1) × 1 / (B1 monthly income forgone) × 12, but it’s easier to compute cumulative sums year-by-year.
Worked example (realistic, rounded):
- Claim at 66: $2,000/month → $24,000/year
- Delay to 70: $2,640/month → $31,680/year (approx. 32% higher)
- Years of forgone income = 4 years = $96,000 in nominal benefits missed (4 × $24,000)
- Annual advantage after 70 = $31,680 − $24,000 = $7,680/year
- Break-even years after 70 = $96,000 / $7,680 ≈ 12.5 years
- Break-even age = 70 + 12.5 ≈ 82.5
Interpretation: If you live past age ~82–83 in this example, delaying to 70 produces higher lifetime Social Security receipts than claiming at 66.
Notes on precision:
- The SSA benefit increase is calculated on a month-by-month basis and COLAs change future totals; include inflation adjustments and taxes in refined models. Use SSA’s calculators or a financial planner to run a precise present-value analysis (SSA calculators: https://www.ssa.gov/benefits/calculators/).
Common scenarios & practical guidance (what I tell clients)
- If you expect a long life (family history of longevity, good health) and don’t need the income now, delaying often makes sense to increase lifetime guaranteed income and survivor protection.
- If you have poor health or pressing cash needs, claiming earlier can be sensible to meet living costs and medical needs.
- For couples with uneven earnings, coordinate claiming. Sometimes the lower earner claims early while the higher earner delays to maximize survivor income. See our guide on Social Security claiming for couples: “Social Security Claiming Strategies for Couples with Uneven Earnings” (https://finhelp.io/glossary/social-security-claiming-strategies-for-couples-with-uneven-earnings/).
- If you plan to keep working, evaluate the earnings test and tax effects; sometimes delaying while working (and letting the benefit grow) is a straightforward strategy if you don’t need the checks.
- Consider tax-efficient withdrawal sequencing: delaying Social Security while using Roth or other tax-advantaged sources early can reduce taxes long-term. See “How to Coordinate Social Security and Retirement Account Withdrawals” for bridging strategies (https://finhelp.io/glossary/how-to-coordinate-social-security-and-retirement-account-withdrawals/).
Special considerations
- Spousal and survivor benefits: A higher benefit for the primary earner raises the survivor benefit floor for the spouse. That potential for survivor protection is often the deciding factor for married couples.
- Divorce and remarriage: Ex-spouses may be eligible for benefits based on a former spouse’s record in some cases; delaying can change what survivors receive.
- Medicare interaction: Medicare eligibility starts at 65; Social Security claiming age is separate. Coordinate Medicare enrollment even if you postpone Social Security.
Tools and resources I recommend
- SSA Retirement Estimator and calculators (Social Security Administration: https://www.ssa.gov/benefits/retirement/).
- Run a break-even and present-value analysis with realistic life-expectancy assumptions and expected COLAs.
- Work with a fee-only financial planner to integrate Social Security timing with retirement asset withdrawals, Medicare planning, and tax strategies. For planning coordination ideas, see our article “When to Claim Social Security: Timing Considerations” (https://finhelp.io/glossary/when-to-claim-social-security-timing-considerations/).
Example client case I used in practice
A 66-year-old client with good health and significant spousal exposure asked whether to delay to 70. We compared claiming at 66 vs. 70 and included: expected longevity based on family history, existing retirement savings, Medicare timing, and survivor needs. The break-even age was about 82; because the client had a family history of living into their 90s and limited pension protection for their spouse, we recommended delaying to 70 and covering the interim with portfolio withdrawals. That plan increased their spouse’s survivor benefit and reduced the risk of outliving assets.
Common mistakes to avoid
- Treating Social Security like a bank CD—don’t focus only on percent returns. Consider longevity, survivor protection, and tax effects.
- Forgetting the earnings test and potential withholding if you claim early while working.
- Ignoring how claiming affects Medicare premiums, taxation of benefits, and means-tested programs.
Bottom line
Delaying Social Security can be a powerful tool to increase guaranteed lifetime income and protect a spouse, but it’s not universally best. Use break-even and present-value analysis that includes your health, family longevity, tax situation, and other income sources. Run SSA’s calculators and consult a qualified planner to tailor a strategy.
Sources & further reading
- Social Security Administration — Retirement & Planning: https://www.ssa.gov/benefits/retirement/
- SSA — Delayed Retirement Credits: https://www.ssa.gov/benefits/retirement/planner/delay.html
- SSA — Retirement Estimator & Calculators: https://www.ssa.gov/benefits/calculators/
- IRS — Taxation of Social Security benefits information: https://www.irs.gov/retirement-plans
Professional disclaimer: This article is educational and does not constitute personal financial, legal, or tax advice. In my practice as a financial planner, I integrate Social Security claiming decisions with cash flow, tax, and estate planning to find the right timing for each client. Consult a qualified planner or tax advisor before acting.
