Average Increase Social Security Benefits Delaying Age 70 Motley Fool

Maximize your retirement budget by waiting until age 70 to claim Social Security benefits, potentially adding thousands to your income.

The decision to wait until age 70 to claim Social Security benefits can have a significant impact on your retirement budget. While it may seem like a long time to wait for some retirees, the increase in monthly benefits can be substantial. By delaying until age 70, retirees can maximize their benefits throughout their retirement, resulting in bigger monthly checks.

There are three main factors that impact your monthly Social Security benefit. The most significant factor is your earnings history, with the Social Security Administration averaging your 35 highest-earning years to determine your primary insurance amount (PIA). Your full retirement age is also a factor, determined by the year you were born, with those born in 1954 or earlier reaching full retirement age at 66. Finally, the age at which you claim Social Security also impacts your monthly check, with an 8% increase in benefits for each year you delay beyond your full retirement age.

Waiting until age 70 to claim Social Security can result in a significant boost in benefits relative to your PIA. Retirees who can claim at age 70 by 2024 receive a 32% increase over their PIA. In 2022, new Social Security benefits awarded to retirees age 70 and older averaged $3,065.48, resulting in an average increase of $743.15 per month or $8,918 per year over their full retirement age benefits.

It's important to note that retirees in a position to delay until age 70 are often higher earners, with a higher average PIA than those who need to claim benefits early. However, the difference in the PIA for those waiting until 70 and those who waited until their full retirement age isn't very significant. Therefore, it seems that those in a position to wait until full retirement age to claim Social Security would benefit from further delaying until 70, all else being equal.

While everyone's situation is different, delaying benefits can provide thousands of extra dollars for your retirement budget and is statistically most likely to help you maximize your savings in retirement. So, if you're able to wait a few extra years, it could add thousands of dollars to your retirement budget.