A Strong Case for Delaying Social Security Benefits

Dustin A. Husarik, CFP®

Vice President – Financial Advisor
Magnan Family Wealth Management

As many of you begin thinking about retirement, it’s essential to understand your Social Security Benefit options. Below is my best effort at making a complex system less overwhelming.

To become eligible for Social Security Benefits you must have accumulated 40 quarters of credited employment history (the math works out to 10yrs of employment). Your earnings history will determine how much you’re eligible to collect in retirement. In an effort to keep things simple, the Social Security Administration takes some combination of your best 35 years of income (The formula is a bit more complex because it applies inflation adjustments and weightings, but nonetheless they are looking at your best 35 years of earnings).

The Social Security Administration bases everything around your “Full Retirement Age (FRA)”.  For most people living today, that is between age 66 and 67 (Yes, depending on what year you were born your FRA can be an odd number like 66 and 8 months). You first become eligible to collect your Social Security benefits at age 62, however doing so will result in a permanent reduction in your monthly payment. If you begin taking benefits at the earliest opportunity, you can expect your monthly payments to be about 30% less than what you would expect to collect at FRA.

If that sounds like a bad deal, you might be right! Each year you delay taking your benefit (until age 70) results in an 8% increase in your monthly payment. To sweeten the deal even more, the Social Security Administration also often applies a Cost of Living Adjustment (COLA). This is an inflation adjustment to your benefit to help offset the inevitable fact that life gets increasingly more expensive over time. Not only do you get the 8% bump for delaying, you are also credited with that year’s COLA. Consider the following example. An individual turns 62 in 2022, but chooses to delay her benefit. That individual received an 8% increase from delaying an additional year and a 5.9% COLA for a total increase of 13.9% for delaying one year. But wait, the story gets better! If that same individual chose to delay in 2023 as well, they receive the 8% increase and an 8.7% COLA increase for a total of 16.7% Increase. Just by delaying the benefit two years, they received a cumulative increase in guaranteed monthly income of 30.6%!

The other best kept secret about Social Security is the survivor benefit. After working with a fair share of widows over the past decade, what I have come to realize is that, behaviorally, the more guaranteed income that is available to them the more peace of mind. If taking care of your loved ones remains your highest priority, it may be worthwhile to consider delaying your Social Security until age 70 if you’re the higher earning spouse. The reason being is that if you predecease your spouse, they will be left with only one Social Security check. By delaying until age 70, you have maximized your Social Security benefit and therefore your surviving spouse will be eligible to collect your higher benefit for the remainder of their life instead of their lower benefit. By maximizing the amount of guaranteed income in retirement, your surviving spouse will feel far more confident navigating the ups and downs associated with a lifetime of investing.

Lastly, delaying your Social Security benefits can help make your other assets last longer. Retirement income planning is focused on getting you the income you need to sustain your in-retirement lifestyle with the absence of a recurring check from an employer (in a tax efficient way). The more guaranteed income you can collect, the smaller the gap becomes to fill the difference with your other assets. If you are taking less withdrawals, your assets may last longer creating more confidence in your retirement and/or providing a legacy for your heirs.

Social Security is complicated, and there is no “one size fits all approach”. If you’re looking for guidance in maximizing your benefits given your unique situation, please reach out to us for help. We have built a network of experts and resources that can help assist in the decision-making process. As a service to you, we are happy to offer our insights to those you care about most if they ‘re also in need of assistance. Happy Thanksgiving!


2022 Social Security COLA: https://www.ssa.gov/news/press/factsheets/colafacs2022.pdf

2023 Social Security COLA: https://www.ssa.gov/news/press/factsheets/colafacs2023.pdf

Social Security Delay Increases:  https://www.ssa.gov/benefits/retirement/planner/1960-delay.html