How to Delay Claiming Social Security Until Age 70

When you turn age 62, if you have paid taxes into the Social Security system, you can apply for retirement benefits. However, waiting until you reach your full retirement age, which is typically age 66 or 67, will result in a higher monthly Social Security check. Individuals who postpone benefits until age 70 will receive the largest monthly amount possible. After age 70, there are no further increases for delaying your benefit.

If you want to wait until age 70 to receive Social Security checks, consider the following guidelines:

— Understand what you will receive.

— Spend down other accounts.

— Create a financial plan.

— Continue to work.

— Lower your cost of living.

— Consider your spouse.

Understand What You Will Receive

The year you were born, the salary you earned during your working years and the age you begin drawing on Social Security will impact the amount you receive. “For every year you delay taking Social Security benefits beyond your full retirement age, you will receive delayed retirement credits,” says Brandon Ashton, director of retirement security at Cornerstone Financial Services in Southfield, Michigan. “These delayed retirement credits equal up to 8% per year in simple interest increases.”

The monthly benefit amount rises each year until age 70. If your full retirement age is 66, and you wait to turn 70 before you apply for Social Security, you can expect to receive checks that are 32% higher. Your Social Security statement lists an estimate of how much you can expect to receive if you start benefits at various ages.

[READ: How Much You Will Get From Social Security.]

Spend Down Other Accounts

You might have retirement accounts that could be tapped, such as a 401(k) or IRA, while you wait to start Social Security. “Never take more than you need and make sure this strategy is benefiting you in the long run, or else it defeats the purpose of delaying your benefits,” Ashton says.

Look at your levels of cash and easily accessible savings accounts. “Any retiree should develop a cash reserve of at least 12 months of spending needs before they retire,” says David Edmisten, founder and lead advisor of Next Phase Financial Planning in Prescott, Arizona. “This cash allows one to meet all their expenses without needing to withdraw from investments or begin their Social Security benefits.”

Savings and investment accounts can be accessed for three to five years as you delay claiming Social Security. Retirees can “look to utilize CD and bond interest, dividends from dividend paying stocks and potentially even selling appreciated assets they’ve held for more than a year to generate additional cash for retirement spending,” Edmisten says.

Create a Financial Plan

As you lay out a budget, you might consider an annuity to supplement income for the coming years. “Annuities are contracts issued by insurance companies that can provide a guaranteed income for life in exchange for a lump sum payment,” Ashton says. There are different types of annuities, and you’ll need to have sufficient funds up front in many cases. In certain circumstances, you could set up annuity payments for the years between your retirement and age 70. “An example is someone who retires at 55 and creates a 15-year fixed period certain annuity,” says Kevin Lao, a financial planner and the founder of Imagine Financial Security in Jacksonville, Florida. “This income will bridge the gap until age 70 and Social Security payments begin. These annuities can be funded with retirement or non-retirement dollars.”

[Read: Social Security Changes Coming in 2022.]

Continue to Work

If you are in good health, you could keep working past age 65 to maintain your house and lifestyle. “Most people have their peak earning years just before they retire,” Ashton says. “Waiting an extra year or two can not only help you earn delayed retirement credits, but can also work toward increasing your retirement accounts.” Once you are 50 or older, you can put an additional $6,500, on top of the $20,500 annual contribution for 2022, into your 401(k), 403(b) or 457 plan. You’ll also be eligible to contribute an extra $1,000 to a Roth or traditional IRA, above the 2022 limit of $6,000.

Lower Your Cost of Living

By reducing your monthly expenses, you can stretch your savings and live on less while you wait for Social Security to start at age 70. Downsizing is one strategy to lower housing costs. “You might consider selling your home and buying a less expensive home or moving to a less expensive city for retirement,” Lao says. “This could create an infusion of tax free cash that you can use for the income bridge to Social Security.” The tax liability exclusion for a primary residence is $500,000 for a married couple and $250,000 for a single person. Other ways to cut back include paying off high interest debt, canceling online subscriptions and traveling and eating out less frequently.

[See: 10 Ways to Increase Your Social Security Payments.]

Consider Your Spouse

If you and your spouse are both eligible for Social Security payments, find out which benefit will be larger. You could choose to start taking the smaller benefit and delay the larger payment. “You will want to delay the larger of the two benefits until age 70,” Lao says. The survivor benefit entitles the spouse who lives the longest to receive the larger of the two benefits. “That way the surviving spouse will have the largest possible benefit for life,” Lao says.

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