Retirement & Financial Planning Report

If you wait until age 70 to start Social Security benefits, you’ll give up current income but get larger checks later. Among the advantages:

Survivor benefits. It could take 20 years to make up for the money you lose by not taking benefits sooner. A 70-year-old retiree might not live past 90 but there’s a much better chance that his 65-year-old spouse will survive him and outlive age 85, perhaps by 10 or more 20 years. A surviving spouse often will receive the Social Security benefit of the first spouse to die, so delaying receipt of benefits can increase a widow’s pension.

Better returns. The more you earn on the early cash flow, the longer it will take a late starter to catch up. On the other hand, with low investment returns there is a relatively short breakeven period. Many retirees hold a considerable amount of low-yielding cash equivalents.

Seniors who delay Social Security could tap those low-yield money market funds or bank accounts if they require spending money while they wait. They’d be reducing their holdings of assets paying 1% or 2% while earning an 8% higher future Social Security benefit for each year they delay.