5 Key Benefits of Delaying Retirement to Age 70
Darrell Croteau - Intelligent Solutions
VP of Sales | Intelligent Solutions | Founder, DCfinsrv | Board Member Support
Delaying retirement from age 67 to 70 can provide significant financial advantages. Here are 5 key benefits to consider:
Substantially Higher Monthly Social Security Payments
By waiting until age 70 to claim Social Security benefits, you can increase your monthly payments by 24% compared to claiming at age 671. This translates to a guaranteed 8% annual return for each year you delay past your full retirement age3. For example, if your full retirement age benefit at 67 would be $2,000 per month, waiting until 70 could increase it to $2,480 per month.
Increased Lifetime Benefits
While you forgo payments between ages 67 and 70, the higher monthly benefit often results in greater lifetime payouts if you live into your 80s. Research shows the break-even point is typically 12-14 years after claiming10. So if you expect to live past 82-84, delaying to 70 will likely maximize your total lifetime benefits.
Larger Cost-of-Living Adjustments
Social Security benefits receive annual cost-of-living adjustments (COLAs). Since these increases are percentage-based, a higher starting benefit at 70 means larger dollar increases each year compared to claiming earlier10. This compounds over time, providing better protection against inflation throughout retirement.
Reduced Required Minimum Distributions
Delaying Social Security allows you to spend down tax-deferred retirement accounts in your 60s. This can reduce your required minimum distributions (RMDs) starting at age 73, potentially lowering your tax burden in later years10. It also provides tax diversification, as only up to 85% of Social Security benefits are taxable, compared to 100% of traditional IRA/401(k) withdrawals.
Additional Time to Grow Retirement Savings
Working until 70 gives you three more years to contribute to retirement accounts and allows your existing savings more time to grow. Research from the National Bureau of Economic Research found that working just 3-6 months longer provides the same boost to retirement income as increasing your savings rate by 1% for 30 years of your career9.
While delaying retirement isn't right for everyone, understanding these potential benefits can help you make an informed decision about when to claim Social Security and retire.
Consider consulting a financial advisor to determine the best strategy for your individual circumstances.
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3 个月Darrell, your article provides a well-rounded and insightful exploration of the financial benefits of delaying retirement to age 70. The detailed breakdown of increased Social Security payments, larger cost-of-living adjustments, and reduced tax burdens offers valuable clarity for anyone considering this important decision. One additional insight to consider is the impact of delaying retirement on healthcare coverage. Working longer often provides continued access to employer-sponsored health insurance, which can help reduce out-of-pocket healthcare costs before Medicare eligibility. This could be a significant advantage, particularly for individuals managing chronic health conditions or high medical expenses. Your thoughtful approach empowers readers to make informed retirement decisions while highlighting key financial advantages. Congratulations on such an impactful and practical piece!