Why Should You Postpone Collecting Social Security Benefits?

Ask Ralph: Why Should I Wait Until 70 to Collect Social Security?

Welcome back to “Ask Ralph,” your daily dose of Christian wisdom for your financial journey. Today, we tackle a question that's been on many minds: "Why should I wait until 70 to collect Social Security?" It's a dilemma many people face as they approach retirement¹. You've worked hard, contributed to the system, and now you can receive those benefits. But is waiting truly the wisest choice? Why Should You Postpone Collecting Social Security Benefits? Let's examine this further, exploring both the financial and spiritual perspectives.

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Understanding Social Security Rules

First, let's clarify the rules. You can start receiving Social Security retirement benefits as early as age 62. However, your full retirement age, when you're entitled to 100% of your benefit, is likely somewhere between 66 and 67, depending on your birth year². Your basic Social Security benefit, the amount you would receive at your full retirement age, is based on your lifetime earnings⁴.

Here's the key: if you delay taking your benefits from your full retirement age up to age 70, your benefit amount will increase³. For each year you postpone, your benefit grows by roughly 8%⁵. That's a guaranteed return you won't find in many other places! However, it's important to note that there is no benefit increase after age 70, even if you continue to delay³.

The Financial Benefits of Waiting

The financial advantages of delaying Social Security are significant. Imagine this: by waiting until 70, you could receive up to 132% of your monthly benefit if your full retirement age is 66, compared to claiming it at your full retirement age⁷. This translates to a larger monthly check and potentially a higher lifetime income⁹.

Think of it as an investment in your future. By delaying, you're essentially purchasing an annuity that provides guaranteed income for the rest of your life¹⁰. And this "annuity" offers an impressive rate of return, especially for those who live longer¹⁰. Between your full retirement age and 70, the annual increase for delaying benefits is 8% per year, tax-free¹. That's a difficult hurdle for most investment strategies to clear!

Delaying Social Security also means a higher baseline for future cost-of-living adjustments¹¹. This can make a significant difference in maintaining your purchasing power over the long term.

To illustrate the impact of delaying Social Security, consider this example: someone who was born in 1960 and would receive $2,000 per month at their full retirement age of 67 could increase their benefit to $2,480 per month by waiting until age 70¹². That's an extra $480 every month!

Biblical Wisdom for Financial Decisions

As we consider the financial benefits of delaying Social Security, it's important to bring in the Christian perspective. While the Bible doesn't explicitly mention Social Security, it does offer principles that can guide our financial decisions.

Proverbs 21:5 tells us, "The plans of the diligent lead to profit as surely as haste leads to poverty." ¹³ Taking the time to carefully consider your options and plan for your future is crucial. Delaying Social Security can be seen as an act of diligence, ensuring we make the most of the resources God has given us.

Christian Principles and Social Security

One key principle is stewardship. We are called to be wise managers of the resources God has entrusted to us¹⁴. Delaying Social Security can be seen as an act of stewardship, ensuring we make the most of our retirement income.

Another principle is contentment. We should be content with what we have, not constantly striving for more¹⁴. However, contentment doesn't mean neglecting wise financial planning. Delaying Social Security can provide a sense of security and peace of mind, knowing you've made a decision that benefits you and your loved ones in the long run.

Stewardship in Retirement

Retirement is often seen as a time to step back and relax, but for Christians, it doesn't mean we stop being kingdom-focused¹⁵. We can continue to use our time, talents, and resources to serve God and others. Delaying Social Security can provide the financial stability to pursue these kingdom-building activities with greater freedom and generosity.

Addressing Concerns and Counterarguments

While delaying Social Security offers compelling benefits, it's important to acknowledge potential concerns and counterarguments. Some worry about their health and whether they'll even live long enough to reap the rewards¹⁶. Others may need the income sooner to cover expenses or support their family¹¹.

It's also important to remember that taking Social Security early means receiving more checks overall, but each check will be smaller¹¹. Additionally, those who claim early may receive smaller cost-of-living adjustments (COLAs) in the future¹⁷.

These are legitimate concerns, and the decision ultimately depends on your individual circumstances. However, it's important to weigh the potential benefits against the risks. For many, the increased income and long-term financial security outweigh the uncertainties.

While delaying until 70 may maximize lifetime income for many, it's not always the best choice for everyone¹⁸. It's crucial to consider your health, financial needs, and family situation.

It's also important to note that even if you delay Social Security, you will need to apply for Medicare at age 65¹⁹. In some circumstances, medical insurance costs more if you delay applying.

Conclusion

Ultimately, the decision of when to collect Social Security is a personal one. However, for many Christians, waiting until 70 offers a compelling combination of financial and spiritual benefits. It's an opportunity to be good stewards of our resources, provide for our future needs, and trust in God's provision.

Before making a decision, I encourage you to calculate your estimated benefits at different ages, consider your individual circumstances, and pray for guidance. God promises to provide for our needs, and He will guide us as we seek to honor Him with our finances.

May God bless you with wisdom and discernment as you make this important decision.

Works cited

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2. Benefits Planner: Retirement | Retirement Age and Benefit Reduction | SSA, accessed January 2, 2025, https://www.ssa.gov/benefits/retirement/planner/agereduction.html
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12. Understanding Delayed Retirement Credits: What to Know, accessed January 2, 2025, https://www.westernsouthern.com/retirement/what-are-delayed-retirement-credits
13. 25 Bible Verses About Managing Your Finances - Pushpay, accessed January 2, 2025, https://pushpay.com/blog/25-bible-verses-about-managing-your-finances/
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