Delayed Retirement: Can I Get More Money From Social Security?

Question:

I am 65 years old and planning on retiring soon. If I wait until I turn 70, do I get any Social Security advantages because of my delayed retirement?

Answer:

Under the system that the Social Security Administration has set up, there may or may not be benefits for you if you choose a delayed retirement. In general, you can elect to start collecting your Social Security retirement payments anytime after the age of 62. However, if you choose to start getting your Social Security retirement payments before your full retirement age (this varies between 65 and 67 depending on the year you were born), you will sacrifice, permanently, a portion of your retirement benefit payments in exchange for early retirement. You can find out your full retirement age by visiting the Social Security Administration's website at http://www.socialsecurity.gov.

If you have not already received your Social Security Statement from the Social Security Administration, you can request to receive a copy of it by calling 1-800-772-1213 or visiting their website. Your Social Security Statement will include a complete record of your lifetime earnings. In addition, the statement will also include an estimation of the various retirement benefits that you could enjoy at various ages.

Although you will receive a larger monthly payment if you elect to choose delayed retirement and start collecting payments at 70, there are other considerations that need to be taken into account. For example, if you are already not working when you are 65 and need extra money in order to pay the bills each month, you should seriously consider collecting your Social Security retirement payments now. In addition, if you have a medical condition that makes it unlikely that you will live much beyond 70 or 75, you should probably start collecting now.

There are many useful tools on the Social Security Administration's website. Perhaps one of the most useful is the retirement benefits calculator. This calculator will give you a useful piece of information, called the "break even age" that will not be included on your Social Security Statement.

To best show what the break even age is and how it works, it is useful to look at an example. Say, for instance, that, based on your lifetime earnings, you would get $1000 per month if you retired at the age of 65, and $1500 per month if you waited until you were 70 to start collecting retirement benefits. The break even age for this example would be the age at which you would have made the same amount of money based on the two choices. Under this scenario, the break even age is 80. When you hit 80 years old, you would have received $180,000 if you had started collecting at age 65, and $180,000 if you had started collecting at age 70. So, if you plan on living past 80 years old, you should elect to wait to collect until you are 70 because you would get more money in the long run. However, if you die before you reach 80, then you would have been better off collecting at the age of 65.