Why waiting to take Social Security benefits can pay off

Most Americans depend on Social Security for retirement income. Among Americans aged 65 or older that are Social Security beneficiaries, 50 percent of married couples and 70 percent of unmarried persons receive 50 percent or more of their income from Social Security. Of them, 21 percent of married couples and about 45 percent of unmarried persons rely on Social Security benefits for at least 90 percent of their income.

With Social Security’s major role, it’s important to try and get the most out of the benefits you’ve earned. Your full retirement age is the age you’re eligible to receive 100 percent of your Social Security benefits. The full retirement age is 66 for eligible workers born between 1943 and 1954. Here are some reasons why waiting to full retirement age, and beyond, may pay off for you.

Collect before full retirement age and you’ll instantly lose money.
Over half of Americans begin collecting Social Security before reaching their full retirement age. Keep in mind that starting early means a significant decrease in your monthly benefit amount, and a reduction in the total amount you’ll receive from the government over your lifetime. The SSA has a helpful benefit reduction chart that provides examples.

Wait until age 70, and you’ll receive a 76 percent higher monthly payout.
Beginning at age 62 and ending at age 70, your benefit grows up to 8 percent per year for each year that you defer taking benefits. That’s a significant rate of return.

Let’s compare two people with the same income, work history and birth year, except one claims Social Security benefits at age 62 and the other waits till age 70. The person claiming at age 70 will receive a 76 percent higher monthly payout.

Keep in mind longevity too. With some people living longer, that higher monthly payout can make a big difference when it comes to managing ever-increasing health care costs, prescription drugs or even using the money for travel.

Provide more for your loved ones.
Your survivor’s (spouse or children) benefit amount is based on your earnings. The more you pay into Social Security, the higher the benefits to your survivor will be.

Survivor benefits are based a percentage of your basic Social Security benefit. The amount also depends on the survivor’s age and the type of benefit he or she is eligible to receive. For example, if you claimed benefits before your full retirement age and were receiving reduced benefits, your loved one’s benefit would be based on that reduced amount.

Taking these factors into consideration can help you determine the best timing for claiming Social Security benefits. When you take a step back to see how Social Security fits into your retirement income plan, you may be able to see where you need to make some adjustments. It’s a great discussion to have with your financial professional.

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This material contains educational information regarding the availability and details surrounding the Social Security program and is not intended to promote any product or service offered by Athene. The information represents a general understanding of the Social Security Program and should not be considered personalized advice regarding Social Security, tax, or legal advice. Details of the Social Security Program are subject to change. Please consult with your tax or legal advisor regarding your individual situation prior to making any decisions. Visit www.ssa.gov for additional details.