Should I Delay Social Security Retirement Benefits Or File When I Stop Working?

Today’s Social Security column addresses questions about whether to delay filing after stopping work early, whether there’s any reason to delay filing past 70 and potential benefits for a surviving spouse with two young children. Larry Kotlikoff is a Professor of Economics at Boston University and the founder and president of Economic Security Planning, Inc.

See more Ask Larry answers here.

Have Social Security questions of your own you’d like answered? Ask Larry about Social Security here.

Should I Delay Social Security Retirement Benefits Or File When I Stop Working?

Hi Larry, I’m considering retirement in three months at 64 1/2. I’m in good health. Friends and family who live four hours away could use my help now, so having time to do this is important. I also want to travel while I’m healthy.

I’ve got $75k in saved cash and about $1M in retirement savings (including $130k in Roth and HSA). My Social Security retirement benefit at FRA (66 and 10 months) will be about $2,600. I’ll have a tiny pension at 65.

Should I hold off on collecting Social Security till FRA and live on cash and my 401k for a year or more? Or should I start benefits when I stop working? Thanks, Jonah

Hi Jonah, You don’t mention a marital history so I don’t know whether or not you might qualify for survivor benefits now or in the future. If survivor benefits will never be a possibility for you, then it sounds like you’d likely be better off waiting until 70 to claim your benefits.

As long as you don’t claim your Social Security retirement benefits prior to 70, your permanent monthly benefit rate will continue to grow by an average of roughly 8% per year until you reach 70. That’s true even if you aren’t working.

Rather that relying on my advice, though, you may want to consider using my company’s software — Maximize My Social Security or MaxiFi Planner — to ensure your household receives the highest lifetime benefits. Social Security calculators provided by other companies or non-profits may provide proper suggestions if they were built with extreme care.

That way you’ll be able to compare your options so that you can decide which filing strategy you believe would be best for maximizing your benefits. Best, Larry

Would There Be Any Difference If I Retire In The Month I Reach Age 70 Or Retiring Two Months Later?

Hi Larry, I turn 70 in November 2024 so my full retirement age is 66. Is there any difference in my monthly benefit if I retire in November 2024 versus waiting until January 2025 to retire? Thanks, Molly

Hi Molly, By “retire,” I assume you’re referring to the month that you claim your Social Security retirement benefits. In that case, the answer is no, except that you’d lose two months of benefits if wait for January.

You can’t earn delayed retirement credits (DRCs) for any months starting with the month you reach 70, so waiting past November 2024 in your case wouldn’t increase your benefit rate.

However, if by “retire” you mean stopping work, then working an additional two months might result in a marginal increase in your benefit rate. Social Security retirement benefits are based on an average of a person’s highest 35 years of Social Security covered wage-indexed earnings, so by earning more in a year than you did in one of your previous highest 35 years of earnings, you could raise your retirement benefit rate at least somewhat.

Regardless of when a person stops working though, there would be no advantage to waiting past age 70 to claim their Social Security retirement benefits. Best, Larry

What Benefits Do I Qualify For?

Hi Larry, My wife passed away at 33 from covid 19. We have two kids together. What benefits do we qualify for with Social Security? Thanks, Paul

Hi Paul, I’m very sorry for your loss. If your wife worked and paid into Social Security long enough to be insured for survivor benefits, then it sounds like your children would likely qualify for surviving child benefits.

And assuming one or both of them are in your care and and are either under age 16 or are disabled, you may qualify for father’s benefits. There is also potentially a one-time death benefit of $255 for which you might qualify.

I would suggest calling Social Security at 800-772-1213 in order to check on your eligibility and possibly make an appointment to apply for benefits. Best, Larry