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Why delay Social Security?

By Jennie L. Phipps ·
Wednesday, March 5, 2014
Posted: 4 pm ET

Lots of people think that delaying when you take Social Security past age 62 is foolish. They adhere to the theory that most people should take Social Security as soon as they can since they don't know how long they'll live.

That point of view probably made sense 20 years ago. But "this is not your parent's Social Security decision," points out Joe Elsasser, a Certified Financial Planner and principal of Social Security Timing, which sells Social Security analytical software.

Elsasser uses this example of someone who retired at 62 in 1980, earning $20,000 a year. The average U.S. wage then was $12,513, and Social Security taxes were imposed on wages up to $25,900. If this relatively well-compensated person had taken his Social Security at 62, he would have received $395 a month. Full retirement age was 65, and delayed retirement credits were smaller. People who took Social Security at 62 received 80 percent of what they would have gotten if they had waited until age 65 to claim. So waiting would only have gotten this person about 20 percent more money -- hardly worth the wait. By delaying until age 70, this person would have received 43 percent more than they would have at age 62.

Today the math is different. People who take benefits at age 62 get 75 percent of what they would get if they waited until age 66. If they delay until age 70, they get 76 percent more than they would have if they had started taking benefits at age 62, according to Elsasser's calculations using Social Security's AnyPIA software.

This boils down to a big bump in benefits for a couple who earns average wages and who utilizes such claiming strategies as "file and suspend" or "filing a restricted claim for spousal benefits ... until age 70," says Elsasser. Joint benefits can increase by as much as $20,000 to $30,000 a year.

"When to take Social Security is a big decision, and it affects every aspect of a retirement plan," Elsasser says.

He argues that in many cases, delaying claiming -- even if doing so means spending down savings -- will pay off big time. He estimates that waiting to take Social Security is a 40 percent cheaper strategy than buying a commercial annuity that would pay the same benefit. Plus, "Social Security is backed by a government promise, is longevity-protected and inflation-adjusted."

To figure out these retirement planning strategies, you'll need to use sophisticated software not available from Social Security. "If you file in the standard way, you'll get the highest benefit that you are eligible for on that day without concern for how it will impact you and your dependents down the road," Elsasser says.

Elsasser's company only sells its software to retirement planners, but you can buy access to competing software packages, including, and

It's money well spent.

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March 06, 2014 at 9:59 pm

So if I wait til I am 66 1/2 and die at 72 how much more will I have made by waiting Jeannie? Some times I think the planners are funded by congress so they can keep their free benefits. Will take mine at 62 while I can still enjoy before confined to wheel chair or retirement home.

March 06, 2014 at 9:51 pm

In addition to all the comments above, what will that extra money be worth in the future? Take it when you can make the most of it. The cost of living will not get lower in the future.

March 06, 2014 at 9:50 pm

Just like Nancy I lost my job and could not find another for 3 years, as soon as I turned 62 I took my SS I had no choice.

March 06, 2014 at 9:46 pm

People that retire early live longer.

March 06, 2014 at 9:26 pm

I am in agreement with everyone else. You work all your life and when it finally comes to time to retire, now we are being told to wait in order to draw your money. Some won't live to reap the so called benefit of "more money", and like George stated, I don't feel that lucky. Give me my money!

Nancy Klintworth
March 06, 2014 at 8:43 pm

Dear Jennie: How old are you? Are you over the age of 60? Ever since I was let go of my previous job, I have unsuccessfully tried to find employment. Over a hundred resumes, three interviews and no call backs. I know that employers cannot discriminate because of age, but tell me why I have not received any call backs. I chose to apply for Social Security at the age of 62 because there is no other way for me to get income. My unemployment benefits have been exhausted after 26 weeks and I need to pay my bills. Until you walk in my shoes, don't tell me what I should or shouldn't do. Why don't you find me employment and I would be glad to wait until I am 65 or 70.

March 06, 2014 at 7:56 pm

Agree with JRyder, Dave, and George. First, one must look at what they feel may be their life span. Many are in situations where they very well could not live to 66 +. Secondly, the reasoning behind a smaller monthly distribution at 62 is that if one does live to or beyond the mortality tabling they will have received all their benefits, plus.
It is an individual decision for sure. If someone wishes to and has the ability to work well beyond 62, 66, or even 70, then it may make sense for them to do so; otherwise enjoy it while it is still around to enjoy - or you are still around to enjoy it!!

March 06, 2014 at 6:13 pm

I do not see how the math works to a great advantage in waiting. I will get $600 more a month if retiring at 66 and 4 months over age 62. If I retire at 62, I would have received $88K by the time I am 66 and 4 months. Dividing the 600 into 88K is 144 months until the balance or crossover point. This means I will be 78 YO before I receive more. Now, if I were to invest that same 88K over the 16 years(78-62) at 5% I would be way into my 80's before I would see more and I would be statistically deceased. Why one needs more money going on 90 than age 62 is a mystery.

March 06, 2014 at 6:07 pm

My retirement income consists of IRA withdrawals and Social Security. To defer SS would mean having to take out more from my IRA at my incremental tax rate, whereas SS withdrawals are only taxed on 85 %. Leaving the money in the IRA allows it to grow tax deferred.

March 06, 2014 at 5:44 pm

That's all well and fine, BUT you would have to live until a ripe old age in order to begin seeing the benefit of waiting to start receiving payments for all those years you did not get any payments. I am not feeling that lucky. .