Column: Hold Off to Gain Bigger Social Security Check

2018-04-10T16:06:09+00:00April 7th, 2018|Opeds and Letters|

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 Ohio, nearly a quarter of all beneficiaries rely on Social Security for at least 90 percent of their income.

The average Social Security benefit for Ohio’s 2,300,000 claimants is about $1,230 per month. That figure could be higher if more Ohioans waited to claim beyond the earliest possible age. On average, Ohio residents retire at 63.

Let’s say Grace is a retiree in Columbus 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 Grace delays claiming until 64, the benefit is $1,766. If she defers until 65, it climbs to $1,900. Of course, if Grace 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 Grace 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 Grace 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 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 at which you claim Social Security retirement benefits is one of the most important choices you’ll make in later life.

Max Richtman is president and CEO of the National Committee to Preserve Social Security and Medicare. He is former staff director of the U.S. Senate Special Committee on Aging.