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Why do workers collect benefits before 70?

In the survey, workers cited these top reasons for not waiting until age 70 to apply for Social Security:

  • 44% fear that Social Security may run out of money
  • 36% need the money
  • 34% say it's their money and they want access as soon as possible
  • 13% say they were advised to take it before age 70

Unfortunately, workers appear misinformed about the fundamentals of Social Security.

"We have a crisis of confidence in the Social Security system and it’s costing American workers real money," Deb Boyden, head of U.S. defined contribution for Schroders, said in a news release.

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5 reasons to delay Social Security benefits

Not everyone can afford to wait until age 70 to claim Social Security but an estimated 90% or more of workers would benefit from waiting until that age, according to a 2022 paper co-authored by Boston University economics professor Laurence Kotlikoff. Here are five top reasons:

1. Increase your benefit

Your Social Security benefit increases by up to 8% each year you postpone collection beyond full retirement age — which is 66 or 67 depending on when you were born. By delaying to age 70, you become eligible for the maximum benefit: up to 132% of your full retirement benefit.

But that doesn't necessarily mean you have to work until age 70. You could use your retirement savings to supplement your cash flow in your late-sixties and then apply for Social Security once you're eligible for the maximum benefit.

Workers can choose to retire and receive Social Security as early as age 62, but risk losing up to 30% of the benefit amount by collecting early.

2. Maximize COLA

The Social Security Administration's annual cost-of-living adjustment (COLA) isn't a set dollar amount but a percentage of your benefit. So by waiting until age 70, not only do you increase your monthly Social Security benefit but you also increase the compound potential of each COLA increase.

3. Reduce your tax bill

If you earn income while collecting Social Security, you might subject up to 85% of your benefit to taxes if your "combined income" surpasses a certain threshold. So waiting to draw until a later age when you've decreased your income or you've stopped working altogether can help lower your taxes.

4. Compensate for under-saving

The majority of workers (59%) aged 45 and older told Schroders they expect to have less than half of the money ($500,000) they believe is needed to retire comfortably. While there's no magic dollar amount you need to retire — Americans believe they need $1.27 million, according to a study by Northwestern Mutual — maxing out your Social Security is one way to make up for a shortfall in retirement savings.

5. Life expectancy

Many prepare for their early years of retirement, but struggle to plan for the later years. When you delay the start of Social Security, you ensure you'll qualify for a higher amount in your later years, when you're likely less able to earn income.

Others fear that delaying until age 70 will amount to a sacrifice made in vain because of a shorter-than-expected lifespan. But keep in mind that your spouse or dependents may receive survivor benefits after you pass.

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About the Author

Sarah Brady

Sarah Brady

Freelance Contributor

Sarah Brady is a (self-)certified money nerd. She's a personal finance writer and speaker who's been helping individuals and entrepreneurs improve their financial wellness since 2013. Sarah has written for Forbes Advisor, USA Today's Blueprint, FORTUNE, Experian, Investopedia and more,

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