There's a reason so many people file for Social Security at 62 -- it's the earliest possible age to get your hands on those benefits. The downside, however, is that doing so slashes those payments and leaves recipients with less money to collect.
On the other hand, 70 is considered the latest age to start taking benefits, and though you technically don't have to file at that point, there's really no reason not to. That's because delayed retirement credits for holding off on benefits past full retirement age (FRA) stop accruing at age 70, so if you're entitled to Social Security, there's no sense in waiting any longer.
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So let's talk about those delayed retirement credits. The appeal of waiting lies in the generous 8% benefits boost you'll get for every year you sit tight past FRA. This means that if your full monthly benefit amount is $1,500 and your FRA is 66, holding off until 70 will result in a $1,980 payout instead. And that's a lot of extra income if you happen to need it.
In fact, if you're low on retirement savings, which is the case for countless older Americans, then it often pays to keep working until age 70 and take Social Security then. That way, you'll have more income available in retirement when you need it. Another reason you might consider filing for benefits at 70 is if you don't need the money sooner to pay your living costs, but rather want the money for leisure purposes. In that case, delaying Social Security will give you extra money to use at your discretion.
Clearly, there are some pretty compelling arguments for taking benefits at 70. But before you convince yourself to go that route, you should know that in some scenarios, filing at 70 is a bad idea.
Why not to claim Social Security at 70
We just talked about the fact that those who don't need their Social Security benefits right away might as well hold off. But if you're in the opposite situation, and you don't have a job, savings, or another income source to fall back on, then it's better to take your benefits earlier than risk racking up debt.
It's estimated that the median savings balance among households approaching retirement is a mere $17,000 -- hardly enough to support what could be a 20-, 25-, or even 30-year retirement. If that's the sort of nest egg you're looking at, and you lose your job in your mid-60s or find yourself physically unable to work, then you pretty much have no choice but to file for benefits as soon as you can. Waiting on Social Security will only mean financing your living expenses on credit cards, and that's a move that could end up completely annihilating all hopes of financial security in retirement.