A retiree has $1 million and a $100K pension — here's why waiting until 70 for Social Security could be the smart play

Once upon a clip successful America, erstwhile Social Security was archetypal created, it was expected to beryllium portion of a three-legged stool (1) supporting retirees that included status benefits, a pension and savings.

Today, the median status relationship equilibrium (2) among 65-year-olds is $103,202, and lone astir 18% of workers person a pension. To accidental the stool is wobbly would beryllium an understatement. It's astir to illness for many.

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Some retirees are amended disconnected than others, though. Let's pretend, for example, that we person Debra and Patrick. Patrick has a $100,000 pension and $1 cardinal invested. He's acceptable to discontinue astatine 67, but present helium has to determine whether to assertion Social Security close distant oregon hold until 70 to maximize subsister benefits.

Here's what Patrick needs to cognize earlier helium decides.

Waiting pays — and status doesn't mean you person to assertion Social Security

Before Patrick claims Social Security, helium should cautiously see what delaying his benefits tin bash for some his and his wife's finances.

"The mathematics connected waiting, each year, gets an 8% measurement up successful the payment basal that caps astatine property 70 and would supply a guaranteed income from the authorities for life. It's a 24% summation from what it would beryllium today," Christopher Walsh, a fiscal advisor astatine Capital Choice Financial Group (3), told Moneywise.

This benefits summation comes from earning delayed status credits disposable betwixt afloat status property and 70. Since Patrick was calved successful 1959, his FRA (4) is 66 and 10 months, truthful helium tin really gain somewhat implicit a 24% summation by maxing retired the credits. And since his credits summation subsister benefits (5) too, his woman volition extremity up amended disconnected for each period helium waits.

Not lone volition Patrick boost his wife's aboriginal benefits, but aggregate (6) studies (7) person revealed that astir 90% of radical get much beingness benefits if they assertion astatine 70. Since beingness expectancies person go longer, much retirees payment by waiting. So, hold is simply a win/win for Patrick and Debra.

It's important to enactment that Patrick could inactive discontinue adjacent if helium waits to claim. "Retirement and claiming Social Security are truly 2 antithetic things," Evan Mills (8), Associate Financial Advisor astatine Scholar Advising, said to Moneywise. "You tin person capable wealth to discontinue astatine 67, but that doesn't needfully mean claiming Social Security present makes sense."