What are the pros and cons of delaying Social Security benefits?

May 09, 2023

Deciding when to take Social Security benefits is an important decision that depends on your individual circumstances. Here are some of the potential pros and cons of delaying your benefits:

Pros of Delaying Social Security Benefits:

  1. Increased Monthly Benefits: The most significant advantage of delaying your Social Security benefits is the increase in your monthly payment. For each year you delay your benefits past your full retirement age (up until age 70), your benefits increase by about 8% per year.

  2. Longevity Insurance: If you live a long life, delaying benefits could provide you with more income later in life when you might need it most.

  3. Larger Survivor Benefits: If you're the higher earner in a couple and you delay taking benefits, it could increase the survivor's benefit for your spouse if you pass away first.

Cons of Delaying Social Security Benefits:

  1. Delayed Income: The most evident drawback is that you won't receive income from Social Security immediately. If you're not working and don't have other sufficient sources of income, this could create financial challenges.

  2. Break-Even Risk: While your benefits increase the longer you delay, there's a "break-even" point — the age by which you would need to live to make delaying worthwhile. If you don't live beyond the break-even age, you might have been better off claiming earlier.

  3. Uncertain Future of Social Security: The Social Security program faces long-term funding challenges. While it's unlikely that benefits would disappear completely for those close to retirement, some adjustments to the system could occur.

When helping our clients with this important decision, we consider your personal situation, including your health, financial needs, and retirement plans, when deciding when to take Social Security benefits.