Tips on Delaying Social Security Benefits

Much has been said about delaying Social Security benefits. Taking benefits at age 62 versus waiting until full retirement age (FRA) makes a significant difference, and so does waiting until age 70 to start claiming. Should you delay? As in most financial planning, it depends.

Do You Need the Money Immediately?

Waiting until your normal retirement age—a progressive age based on the year of your birth—results in a benefit some 30% higher than taking benefits at age 62. Waiting until you’re 70 results in a benefit about another 32% higher than the amount at full retirement age.  

If you decide to wait to claim a larger benefit in a few years, do you have other resources to support yourself in the interim? This might include retirement accounts such as a 401(k) plan or an individual retirement account (IRA). What about a pension, taxable investments, or cash? The big question: What is your income in this early part of retirement?

Are You Still Working?

A part- or full-time job can be a plus in early retirement, but working and taking Social Security benefits before full retirement age can also push you over the annual earnings limit, which trims benefits. For 2024, the annual earnings limit is $22,320. That limit increases in 2025 to $23,400.

This means that those younger than full retirement age during all of 2024 lose $1 of benefits for each $2 they earn more than $22,320.

Those reaching full retirement age during 2024 lose $1 of benefits for each $3 they earn over $59,520 ($62,120 in 2025) until the month they reach full retirement age. Note: The Social Security Administration (SSA) counts only earnings before the month one reaches full retirement age.

The annual earnings limit does go away at full retirement age, but benefits may still be taxable up to 85%.

If you’re working and in a high-income tax bracket, you may want to delay taking benefits until your earnings are lower or until you reach age 70.

Take Cash Now or a Larger Benefit Later?

Those who take Social Security at age 62 face a significant and permanent reduction in benefits compared with those who wait. This reduction drops proportionately for each year a recipient waits between 62 and their full retirement age.

As mentioned earlier, waiting until age 70 results in a permanent benefit some 32% higher than if benefits start at full retirement age. This increase, which is also proportional, increases every year between full retirement age and age 70.

Another wild card is life expectancy. The average life expectancy for a 65-year-old American in 2024 is 18.5 years for a male and 20.9 years for a female—a long time to provide additional money if benefits were taken too early.

Longevity calculators and actuarial tables can help determine lifespans. But also look closer to home. For those whose family isn’t especially long-lived—researchers seem split on whether family history predicts a long life—or who have an illness that threatens to shorten their life, taking benefits sooner rather than later might make sense.

The Bottom Line

When to take Social Security benefits is an important decision—and a complex one. Take ample time and seek advice before deciding which way to go. And keep an eye on changing benefit levels and other shifts in Social Security; these are reviewed every year.