9 Reasons to Consider Delaying Social Security Benefits
You’ve probably heard financial experts advising people to claim Social Security as early as possible. They say things like:
- “You don’t know how long you’ll live.”
- “Take it now while you’re young and healthy.”
- “Social Security might go bankrupt.”
But what if I told you that for high-net-worth retirees, claiming early could cost you several hundred thousand dollars in lost income and negatively impact your investment portfolio over time?
In this article, we’re going to dive into nine compelling reasons why you might consider delaying your Social Security benefits as long as possible. This advice is particularly relevant for individuals over 50 who have accumulated at least a million dollars in retirement savings.
The Current Economic Context
Before we dive into our main topic, it’s important to note some significant economic developments that could impact retirement planning. As of July 2025, all three major credit rating agencies have downgraded US credit from AAA to AA. This downgrade stems from rising national debt (currently at $36 trillion), large annual deficits, and higher borrowing costs for the government.
For retirees, this has several implications:
- Bond yields have increased, offering higher interest income on new issues
- Existing bonds may have decreased in value
- There’s increased volatility in fixed-income investments
These factors make your Social Security claiming strategy even more critical as part of your overall retirement plan.
Social Security Basics: What You Need to Know
Before discussing claiming strategies, let’s review some Social Security fundamentals:
- Eligibility: You need 40 credits (typically achieved by working for 10 years) to qualify
- Primary Insurance Amount (PIA): The benefit you’ll receive at full retirement age
- Full Retirement Age: For most people born after 1960, this is age 67
- Early Claiming: You can claim as early as 62, but with a reduction of up to 35% from your PIA
- Delayed Claiming: For each year you delay beyond full retirement age (up to age 70), your benefit increases by 8%
In 2025, the average monthly Social Security benefit is about $1,840 across all recipients, with retirees receiving slightly more at around $1,900 per month. However, if you’ve had above-average earnings throughout your career, your benefits could be significantly higher.
The maximum possible monthly benefit at full retirement age is over $4,000. If claimed early at 62, the maximum is about $2,800, while delaying until 70 could provide up to $5,100 per month. For a married couple with two high earners, this could mean a combined monthly benefit of $8,000 to $10,000, a substantial fixed income stream.
Nine Reasons to Consider Delaying Social Security
1. You or Your Spouse Are Still Working
If you or your spouse continues working, whether part-time or full-time, this income might cover your basic necessities. You can supplement this with portfolio withdrawals if needed.
Additionally, if you claim Social Security while still working before reaching full retirement age, you’ll be subject to the retirement earnings test. This means Social Security will reduce your benefits if your wages exceed certain thresholds. While these reductions aren’t permanent (you’ll receive adjustments later), delaying benefits while working can simplify your financial situation.
2. Higher Guaranteed Monthly Benefit
This is perhaps the most obvious reason to delay. By waiting until age 70 instead of claiming at 62, you can increase your monthly benefit by approximately 77% (avoiding the 35% reduction at 62 and gaining 24% from delayed retirement credits between 67 and 70).
Example
If your primary benefit amount at 67 is $3,000, claiming it at 62 would reduce it to approximately $1,950, while waiting until 70 would increase it to approximately $3,720 per month. That’s a difference of $1,770 per month or $21,240 per year!
Of course, by delaying, you will be forgoing benefits for several years. The break-even point—where the cumulative benefits from delaying surpass what you would have received by claiming earlier—typically occurs around age 83. If you live beyond this age, delaying will have provided greater lifetime benefits.
3. Longevity Insurance
Social Security functions similarly to an annuity, providing guaranteed income for life. This “longevity insurance” becomes increasingly valuable the longer you live.
According to Social Security’s actuarial tables, a 60-year-old male today has a life expectancy of 80.4 years, while a female has a life expectancy of 83.5 years. However, many high-net-worth individuals have access to better healthcare and tend to live longer than these averages.
By delaying Social Security, you’re essentially purchasing a larger “annuity” that increases with inflation each year through cost-of-living adjustments (COLAs). Unlike private annuities, which may not include inflation protection, Social Security benefits are adjusted annually to keep pace with the Consumer Price Index.
4. Spousal and Survivor Benefits
For married couples, delaying benefits can significantly impact the financial security of both spouses.
While spousal benefits (up to 50% of the primary earner’s benefit at full retirement age) cannot be increased by delaying beyond full retirement age, survivor benefits can be. If the higher-earning spouse delays claiming until 70 and then passes away, the surviving spouse can step up to that higher benefit amount.
Example
Let’s say that Jack’s benefit at full retirement age is $4,000 per month, and Jill’s is $2,500. Jack decides to delay receiving benefits until age 70, which increases his benefit to $5,000 per month. When Jack passes away, Jill will receive $5,000 instead of $4,000. This provides significant additional income protection for the surviving spouse.
5. Tax Efficiency
Social Security benefits may be partially taxable depending on your “combined income” (adjusted gross income + tax-exempt income + half of your Social Security benefits):
For single filers:
- Below $25,000: 0% taxable
- $25,000-$34,000: Up to 50% taxable
- Above $34,000: Up to 85% taxable
For married filing jointly:
- Below $32,000: 0% taxable
- $32,000-$44,000: Up to 50% taxable
- Above $44,000: Up to 85% taxable
By delaying Social Security and strategically managing your income during the “Roth conversion window” (the period between retirement and Required Minimum Distribution age), you might be able to convert traditional IRA assets to Roth while keeping your tax bracket lower. Then, when you start Social Security at 70, a smaller portion (or potentially none) of your benefits might be subject to taxation.
6. Maximizing Legacy
While claiming early and investing those benefits might seem like a good strategy for maximizing your legacy, delaying can actually be more effective if you live a long life.
Yes, delaying Social Security means higher portfolio withdrawals in the short term. However, once you start receiving the higher benefit amount, your lifetime withdrawal rate decreases. Over a 15-25 year retirement, this can result in greater portfolio preservation and a larger inheritance for your heirs.
In one case study, a client with a $1 million portfolio who delayed claiming Social Security saw their portfolio initially dip but then recover significantly. By year 22 (around age 84), their portfolio value exceeded what it would have been had they claimed early, ultimately leaving a larger legacy.
7. Peace of Mind
The simple psychological benefit of having a higher guaranteed income stream shouldn’t be underestimated. Many retirees sleep better knowing they have a substantial, inflation-protected income source that isn’t dependent on market performance.
This peace of mind factor is why many people work longer than financially necessary—they want to maximize their guaranteed income in retirement.
8. Health Savings Account (HSA) Eligibility
This is a more technical consideration, but essential for those with HSAs. Once you enroll in Medicare at 65, you can no longer contribute to an HSA, even if you’re still working and covered by a qualified employer plan.
When you begin collecting Social Security after 65, you’re automatically enrolled in Medicare. If you plan to work past 65 and want to continue contributing to an HSA, delaying Social Security is necessary.
9. Flexibility
Deciding to delay Social Security doesn’t lock you in permanently. If you initially plan to delay until 70 but retire into a market downturn, you can start benefits earlier than planned to reduce pressure on your investment portfolio.
This flexibility allows you to adjust your strategy according to changing market conditions, health developments, or other life circumstances.
Real-World Impact: A Case Study
Let’s look at a real example of how different claiming strategies affect lifetime benefits. For a couple we’ll call Jack and Jill, we analyzed three scenarios:
- Both claiming at 62
- Both claiming at full retirement age (67)
- Both claiming at 70
Assuming Jack lives to 85 and Jill to 90, with a 2% annual cost-of-living adjustment:
- Claiming at 70: $2.3 million in lifetime benefits
- Claiming at 62: $1.8 million in lifetime benefits
That’s a $500,000 difference in favor of delaying!
Making Your Decision
Every Social Security claiming decision is unique. There’s no one-size-fits-all approach, and hundreds of different claiming scenarios exist based on your specific circumstances.
Don’t let emotions or pessimistic assumptions about the system drive your decision. While concerns about Social Security’s future are valid, making claiming decisions based on fear rather than analysis could cost you hundreds of thousands of dollars.
Your Social Security strategy should be coordinated with other aspects of your retirement plan, including:
- Your investment portfolio strategy
- Tax planning
- Healthcare costs
- Spousal considerations
- Legacy goals
For high-net-worth individuals, the decision is particularly nuanced. While you may not “need” Social Security to survive, optimizing this benefit can significantly enhance your retirement security and legacy planning.
Next Steps
If you’re approaching retirement and wondering if you should delay Social Security, check out Episode 79 of The Planning for Retirement Podcast. Consider working with a financial advisor who specializes in retirement income planning. They can help you analyze your specific situation and develop a claiming strategy that aligns with your overall financial goals.
Our team is ready to help you develop a comprehensive retirement plan that aligns your Social Security strategy with your overall financial objectives, providing you with confidence in your retirement journey.
Take the first step toward a more confident retirement by completing our Retirement Readiness Questionnaire and subscribing to the Planning for Retirement podcast for in-depth financial planning strategies and insights.
This article is for general education purposes only and should not be considered as tax, legal, or investment advice.
