The Case for Delaying Social Security Benefits

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The Case for Delaying Social Security Benefits

by | Mar 31, 2023

Retirement researchers have been advocating for delaying Social Security benefits until as close to age 70 as possible, and new research backs up this advice.

Many people may realize that delaying means an increase in benefits, but they don’t realize just how much of a boost it can mean. According to a new paper by Steve Parrish and Wade Pfau in the Journal of Financial Planning, delaying benefits from age 62 until 70 can lead to an increase of 77 percent when adjusted for inflation.

One significant reason why it makes sense to delay taking benefits is that the data used to determine the levels was collected in 1983 and set to make the Social Security system indifferent to how old people were when they made their claims. These levels were determined by life expectancy, and the goal was to ensure that people who lived to the average life expectancy got the same amount of lifetime benefits.

Why does this matter? Because life expectancy has changed significantly since 1983. So, instead of half of the people in this age group living beyond average life expectancy, more than half do. So, more than half of people in this age group get higher benefits by delaying when they start their claim.

That’s not all. Interest rates are also much lower than in 1983, so you get less money from your investments than you would have back them. It makes more sense to use other assets to pay for retirement and put off collecting Social Security until age 70 when the monthly income will be significantly higher.

Factor in the annual tax-free benefits increases, and the monthly amount is even higher.

Considering all these things, it makes much more sense to wait to file for benefits than to take them early, even if you’re planning to invest them. The only way that taking benefits early and investing them is a better strategy is if you can earn enough to offset the guaranteed yearly increases, which is 8 percent, tax-free. A high hurdle and by no means guaranteed.

The researchers address this in the paper, saying that historical data shows that it is not common for investments to beat the increase in Social Security benefits, especially for people who live beyond average life expectancy.

For married couples, the case for delaying benefits is even stronger. While both partners are alive, they each receive Social Security benefits. When one spouse passes, their benefit stops and the surviving spouse usually continues to receive the higher benefit. Delaying Social Security benefits leads to a higher benefit; the higher the benefit, the better for the surviving spouse.

While it may make sense for some people to take their Social Security benefits before age 70, for most people, waiting until age 70 is the best way to ensure the highest lifetime payments.


Any opinions are those of Thomas Fleishel and not necessarily those of Raymond James. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Every investor’s situation is unique and you should consider your investment goals, risk tolerance and time horizon before making any investment. Prior to making an investment decision, please consult with your financial advisor about your individual situation.


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