Should You Delay Social Security? 5 Key Questions to Ask Before Making a Decision

Deciding when to claim Social Security benefits is one of the most debated topics in retirement planning. On one side, many advocate for claiming Social Security as early as possible—starting at age 62—because tomorrow isn't promised. On the other side, some believe you should wait as long as possible to maximize your benefit.
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As a Certified Financial Planner (CFP), I’ve helped hundreds of clients transition into retirement. My take on this debate is it depends. This decision isn't one-size-fits-all, and there are several important factors to consider.
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In this post, I'll outline five critical questions you should ask yourself. If you answer "yes" to these, it might be a good idea to delay claiming Social Security benefits. If you're married and there's a significant age gap between you and your spouse, pay special attention to question five.

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YouTube video version of this post:

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Question 1: Do You Expect to Live Into Your Late 70s, 80s, or Beyond?
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Your life expectancy plays a huge role in determining whether it’s worth delaying Social Security. Social Security pays out what's called your Primary Insurance Amount (PIA) at Full Retirement Age (FRA), which is around 67 for most people. You can claim benefits as early as age 62, but doing so reduces your monthly benefit by about 30%. Conversely, delaying until age 70 can increase your benefit by roughly 24%.
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Let’s look at an example:
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• At 62, you receive a 30% reduction in benefits.
• At 70, you receive a 24% increase in benefits.
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The decision of when to claim hinges on what’s called a "break-even age." This is the age at which the cumulative amount of benefits you would receive by delaying becomes greater than claiming early. For many, this break-even age is around 79 or 80.

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So, if you expect to live beyond your late 70s, delaying Social Security will likely pay off over the long run. However, if you have concerns about your health or a family history of shorter life expectancy, it may make more sense to claim earlier.
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Question 2: Do You Have Other Income Sources to Cover Expenses?
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Delaying Social Security only makes sense if you have enough other income to cover your expenses until you decide to claim. This could be from investments, pensions, rental income, or part-time work.
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If your other income sources allow you to live comfortably, delaying can be a smart strategy. You'll benefit from the delayed retirement credits, which increase your Social Security benefit over time and can help combat inflation.
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However, if relying solely on other income sources means significantly reducing your quality of life in those early retirement years, it might not be worth delaying. The key is to balance your lifestyle today with your financial future.
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Key Points to Consider:
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• Portfolio withdrawals and their tax implications.
• Pension payments or rental income that can supplement your lifestyle.
• Beware of sequence of returns risk, which is the risk that the stock market will take a significant drop early in retirement, potentially impacting the longevity of your portfolio.
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Question 3: Do You Plan to Do Roth Conversions?
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A common retirement tax strategy is to do Roth conversions after you retire but before you start taking Social Security. These conversions allow you to transfer money from tax-deferred accounts like a traditional IRA or 401(k) to a Roth IRA, potentially at a lower tax rate.
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If Roth conversions are part of your retirement plan, delaying Social Security can help you minimize your taxable income during the conversion years. This is because your Social Security income would otherwise increase your taxable income and potentially push you into a higher tax bracket.
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However, depending on how much you plan to convert, you might not need to delay Social Security all the way to age 70. The right timing for you will depend on how much is in your pre-tax accounts and your overall tax strategy.
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Question 4: Will You Continue Working Into Your 60s?
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If you plan to work into your early or mid-60s, you need to be aware of the Social Security earnings test. This rule reduces your Social Security benefits if you claim before FRA and continue to earn more than a certain amount from work.
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• For every $2 you earn over a specific limit, your Social Security benefits are reduced by $1.
• There is a higher threshold as you get closer to FRA, after which the reduction is less severe, but it still impacts your total benefit.
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For example, in 2024, the earnings test limit is $21,240. If you earn above this amount, your benefits will be reduced. After FRA, there is no earnings test, and you can work and claim Social Security without any reduction in benefits.
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If you plan to keep working, delaying Social Security until you stop working—or at least until your income falls below the earnings test threshold—can help maximize your benefits.
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Question 5: Are You Married with a Significant Age Gap?
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If you and your spouse have a significant age gap, delaying Social Security can help maximize spousal and survivor benefits. Here’s why:
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1. Spousal benefits: Your spouse is eligible for up to 50% of your Social Security benefit, depending on their own benefit amount and when they claim.
2. Survivor benefits: If you're the higher-earning spouse and delay Social Security, your spouse could receive a higher survivor benefit after you pass away.
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For couples with an age gap, it often makes sense for the older, higher-earning spouse to delay benefits as long as possible, to increase the future income stream for the surviving spouse. If you're the younger spouse, you can still claim your own benefit early and later switch to a spousal or survivor benefit if it's higher.
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Conclusion
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Deciding when to claim Social Security is a personal decision that depends on various factors—life expectancy, other income sources, retirement plans, and family dynamics. If you answered "yes" to one or more of these five questions, delaying Social Security could be a smart move for you.
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However, if the thought of delaying Social Security keeps you up at night or significantly impacts your lifestyle, then it may not be worth it.
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Still unsure about when to claim Social Security?
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Consider working with a financial planner to run the numbers and see what makes the most sense for your unique situation. Remember, there's no one-size-fits-all answer—it's about what works for you.
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If you found this helpful, be sure to check out my video on situations where it makes sense to claim Social Security early!

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