Claiming Social Security at 70 can be valuable — but it isn’t easy

Earlier this month, Mary Kittle joined the ranks of an elite few older Americans to achieve a particular financial feat.

Kittle, a Henderson, Nevada resident, applied in time to start receiving Social Security benefits on her 70th birthday.

In 2016, just 4.6 percent of women and 2.9 percent of men first claiming Social Security benefits were age 70 or older, according to the latest data from the Social Security Administration. A decade earlier, those rates were 2 percent and 0.8 percent, respectively.

Those claiming their benefits as soon as they become eligible to file at age 62 still represent the largest group, at 36.9 percent of women and 31.9 percent of men in 2016. But that cohort is down from 50.4 percent and 45.7 percent in 2006.

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“You can see a bit of a trend that people are starting to wait longer,” said chartered financial analyst Wade D. Pfau, a professor of retirement income at The American College of Financial Services.

Potential reasons for the shift could include more people working into their retirement years, and becoming better educated about the value of delaying their claim, he said. (See details below.)

“Today because of the low interest rates and the fact that people are living longer, they are much more likely to benefit [from delaying],” Pfau said.

Social Security benefits math

Claim at your full retirement age — which depends on when you were born, and would be somewhere between age 66 and 67 for those born in 1943 or later— and you get 100 percent of the benefit available to you, based on your personal work record.

If you claim any earlier, your benefits will be permanently reduced — to what extent varies by your birth year and how much earlier you’re claiming. For example, SSA estimates someone born in 1955 would receive 74.2 percent of their full monthly benefit by claiming at age 62, and 92.2 percent by claiming at age 65. (That cohort’s full retirement age is 66 and two months.)

Hold out past your full retirement age, and you’ll receive delayed retirement credits of 8 percent per year until age 70, when your monthly benefit stops increasing. Claim at 70 or later, and you’d be entitled to 132 percent of your full monthly benefit.

Kittle’s initial plan was to file at or near her full retirement age, and invest the benefit while she continued to work. (A Southwest Airlines flight attendant, she currently has no plans to retire.) By Kittle’s estimates, she’d break even by age 80 regardless of when she claimed.

Her son, Sean, made the case that she was better off waiting.

“I remember saying to him, ‘What’s the difference if I start collecting at 67 and put that money away?” Kittle recalls. “He said, ‘OK Mom, but what if you live past 80?'”

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