Is it worth waiting until 70 for social security?
Social security is a critical component of retirement planning for many individuals in the United States. With the rising cost of living and the uncertainty of the economy, many people are left wondering whether it is worth waiting until the age of 70 to start receiving their social security benefits. This article aims to explore the advantages and disadvantages of delaying social security benefits until the age of 70, providing valuable insights to help individuals make an informed decision.
Advantages of Waiting Until 70
One of the primary advantages of waiting until the age of 70 to receive social security benefits is the increased monthly payment. For every year an individual delays receiving their benefits, their monthly payment increases by approximately 8%. This means that by waiting until 70, a person can potentially receive a significantly higher monthly payment throughout their retirement years. This can be particularly beneficial for those who have a longer life expectancy or who are concerned about maintaining their standard of living in their later years.
Another advantage of waiting until 70 is the potential for increased cost-of-living adjustments (COLAs). Social security benefits are adjusted annually to account for inflation, which helps to ensure that recipients can maintain their purchasing power over time. By delaying benefits, individuals may benefit from higher COLAs, as the adjustment is based on the average inflation rate over the past three years. This can help to offset the rising cost of goods and services during retirement.
Disadvantages of Waiting Until 70
While there are advantages to waiting until 70 for social security benefits, there are also some disadvantages to consider. One significant drawback is the potential for a longer wait time before receiving any benefits. Waiting until 70 means that an individual will not receive any social security payments for an additional five years, which could create financial strain for those who are not financially prepared to wait.
Another disadvantage is the risk of not living long enough to recoup the benefits. While delaying benefits can result in a higher monthly payment, there is always a chance that an individual may not live long enough to fully benefit from the increased payment. This is particularly relevant for those with a family history of early death or health concerns.
Conclusion
In conclusion, whether it is worth waiting until 70 for social security benefits depends on an individual’s unique circumstances, including their life expectancy, financial situation, and personal priorities. While waiting until 70 can result in a higher monthly payment and increased COLAs, it also comes with the risk of a longer wait time and the potential for not fully benefiting from the increased payment. It is essential for individuals to carefully evaluate their own situation and consult with a financial advisor to make the best decision for their retirement planning.
