Don’t Wait Until 70 for Social Security Unless You Hear This First

Think waiting until 70 is the gold standard for Social Security? We dig into the real math behind delayed retirement credits and the hidden trade-offs that rarely make it into the headlines. Drawing on years of planning experience and two vivid case studies, we show how the “bigger check later” can either amplify your lifetime income or quietly drain the resources you need to feel secure.

We start with the promise of delayed credits and then zoom out to the full picture: how bridging years are funded, how portfolio withdrawals reduce compounding, and why taxes can swing the outcome. You’ll hear about Greg and Michelle, a couple who used low-income years to convert IRAs to Roth, trimmed future RMDs, and paired those moves with higher benefits at 70. Then meet Linda, who spent down her savings to wait for a larger benefit and ended up with a thinner cushion and more anxiety. Along the way, we break down longevity assumptions, the importance of survivor benefits, and the outsized impact of sequence risk when markets fall during your withdrawal window.

By the end, you’ll have a practical framework to compare claiming ages on an after-tax basis, stress test market downturns, and decide whether you value maximum lifetime income, early-retirement flexibility, or a blend of both. If you’ve ever wondered whether to file early, wait until full retirement age, or push to 70, this is your roadmap for choosing the path that fits your health, taxes, investments, and lifestyle.

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Episode Transcript

SPEAKER_00 (00:00):
You've probably heard some version of this

(00:01):
before.
You should always wait until ageseven to collect social
security.
That's how you get the mostmoney.

But here's the thing (00:06):
that's not actually true for everyone.
And in fact, for many people,it's quite the opposite.
So before you commit todelaying, let's first talk about
when that decision mightbackfire.
As a financial advisor, I'veworked through this exact math
with hundreds of clients beforeand really seen the nuances and
the intricacies of when might itmake sense to delay versus when
might that actually cost you.
So let's start by understandingthe math here.

(00:26):
The idea of waiting until 70comes from very simple math.
Once you reach your fullretirement age, every year
beyond that that you wait upuntil age 70, you get the
benefit of a delayed retirementcredit.
A delayed retirement creditcomes up to 8% per year, broken
down into monthly incrementsthat continues to grow your
benefit all the way until itmaxes out at the age of 70.

(00:46):
On paper, that soundsunbeatable, but retirement's not
lived on paper.
It's lived in reality.
And this decision on SocialSecurity actually impacts every
other decision with yourfinancial planning as well.
This will impact yourinvestments, your taxes, and
even your overall lifestylestrategy.
So before you delay, let's takea look at what that impact might
be so you can see what mightmake most sense for you.

(01:06):
To do this, I'm going to providesome additional context around
waiting until 70 and some of theimplications.
And then I'm going to show youtwo case studies.
One where this worked, one whereit didn't, so you can identify
what makes sense for you.
So going back to collecting atage 70, it is absolutely true
that if you wait until 70, thatbenefit at age 70 is the highest
benefit you could possiblyreceive.
There is no disputing that.
But there are trade-offs.
The biggest trade-off thatpeople fail to understand is

(01:29):
this.
Let's assume you're going toretire at 62.
You retire at 62, but you wantto delay your social security
benefit until 70 because youknow you're going to lock in a
higher investment amount or ahigher income amount, I should
say.
But in those gap years, duringthat eight years of time,
where's income going to comefrom?
Well, for most people, income isgoing to come from their
portfolio.
Nothing wrong with that.
We invest so that one day we canwithdraw.

(01:50):
But here's the context, orhere's what that matters.
If you start pulling from yourportfolio at age 62 and you do
that for eight years, that'seight years of money that you're
pulling out of your portfolio,and there's an opportunity cost
to that.
And to properly frame that,people don't collect their
social security benefit earlybecause there's an opportunity
cost.
It's going to cost them thehigher amounts of social

(02:11):
security that they could havelater received had they waited
until later age, such as 70.
Well, that same thing applies toyour portfolio.
Every year that you're drawingdown your portfolio, that's less
money that would have otherwisebeen growing for you.
Now, this obviously is differentif you continue working all the
way until 70 and then collectyour benefit then.
At that point, it probably doesmake sense to collect at 70.

(02:31):
But understand that if you'restopping work before then and
you're drawing down yourportfolio, you are
simultaneously increasing yoursocial security benefit, but
also decreasing your portfolioand decreasing the income you
could potentially create fromyour portfolio.
So don't just look at thisnumber increasing, also
understand what's the offset.
And what you really should belooking at is what's the highest

(02:52):
net combined amount that youcould receive between Social
Security and your portfolio, notjust looking at this number
growing all the while thisnumber on the back end is
continuing to decline.
Now, the other trade-off, ofcourse, put simply is no age is
guaranteed.
Yes, we can plan and yes, we cantake care of our health, and
yes, we can look at familylongevity, but we're not
guaranteed any number of yearson this earth.
So yes, we should planprudently, but there is

(03:15):
something to be said if we don'tknow if we're gonna make it.
We don't know how long we have.
So there's a delicate balancethere.
But of course, if you're not ingood health, if you don't have
longevity in your family,waiting until 70 might maximize
your monthly benefit.
But we're more concerned aboutisn't just the monthly benefit,
it's the lifetime socialsecurity benefit.
And it's not even just thelifetime social security
benefit, as I just mentioned,it's your lifetime cumulative

(03:37):
income benefit from all of yourincome sources, including not
just social security, but alsoyour portfolio, which will be
generating income for you aswell.
So, how do we not look at justthe small number, but look at
the big picture number tounderstand what makes most
sense?
So let's look at two casestudies when it worked, when it
didn't, so you can understandhow these different things tie
together.
Case study number one, you haveGreg who's 66, Michelle, who's

(03:59):
64.
They have plenty of savings,including a lot of money in a
brokerage account and cash.
They had moderate spending, andthey had a significant balance
of money in their pre-tax IRAs.
They also were in great healthand they had longevity on their
side when they looked at familyhistory.
Now, what worked for them?
What worked for them was todelay until 70.
Here's why.
By delaying until 70, not onlywere they maximizing that social

(04:21):
security benefit, which wouldlast them for the rest of their
lives, but they're also able tolive on some of their cash and
brokerage account balances.
What that did was it kept theirtaxable income very low for
those first four to six yearsuntil both of them hit age 70.
During those years, we didn'tjust sit back and enjoy having a
low tax bracket.
We said, let's take advantage ofthis.
Let's capitalize on this andstart shifting some of the money

(04:42):
from our pre-tax IRAs into ourRoth IRAs.
So by using low-income tax yearsto do so, we were able to shift
a large amount from their IRAsto their Roth IRAs so that when
required distribution age began,not only did they have large
social security benefits, but ifthey hadn't done any Roth
conversions, they would have hada very large required minimum

(05:02):
distribution.
So when you stack two max socialsecurity benefits, high required
minimum distributions on top ofany other dividends or interest
or income sources they have,that's a really high tax bracket
that are all of a sudden pushedinto.
By delaying Social Security, notonly did it maximize income, but
it allowed them to positiontheir Roth assets for maximum
long-term growth because thatwas money that would never be

(05:23):
taxed again.
So for Greg and Michelle, itworked wonderfully to delay
until 70.
Now, on the flip side, we haveLinda.
Linda was 63, in moderatehealth, moderate family life
expectancy.
She decided to wait until 70because everyone said it's best.
Well, what Linda didn'tanticipate is that her portfolio
value was diminished greatly.
Now, what Linda didn't fullyexpect is yes, she knew that

(05:45):
social security was going to behigh, but what she had to do to
get there cost her quite a bit.
She had to spin through most ofher portfolio assets between 63
and 70.
So by age 70, she had a goodbenefit, but she didn't feel
very secure going forwardbecause that social security
income met a good amount of herneeds, but she didn't have much
extra.
And not only did she not havemuch extra, but she felt a bit

(06:07):
insecure.
She felt anxious about what ifthere's a major health event?
What if something happens?
And what she failed to accountfor was yes, she maximized
social security, but the cost ofthat was diminishing or drawing
down much of her portfolioreserves.
So for Linda, waiting until 70didn't hurt Social Security.
It just hurt other aspects ofher plan.
And when she looked at the wholepicture, what she realized is

(06:28):
that had she collected sooner,not necessarily at 63, but
collecting sooner probably wouldhave saved her a lot of
heartache.
So to summarize, there'swonderful reasons to wait until
70 to collect at 70, not theleast of which is survivor
benefits to protect a potentialsurviving spouse here.
But here's some cases wherewaiting until 70 might not make
sense.
Number one, you don't have greathealth or longevity in your

(06:48):
family.
If you don't have a long lifeexpectancy, waiting until 70
maximizes your monthly benefit,but probably reduces the overall
income you're going to receivefrom Social Security and other
sources over your lifetime.
The second instance when itmight not make sense is you have
to draw heavily from yourportfolio in order to make it
until age 70.
If you have to draw heavily fromyour portfolio, sure you're
maximizing your income, butyou're simultaneously

(07:10):
diminishing the amount of incomethat portfolio can then create
for you over the rest of yourlifetime.
Now, part three is really acontinuation of this.
What if not only are you drawingdown your portfolio, but you get
hit with a major bear market inthe midst of all this?
If you go back to Linda'sexample, what if it wasn't just
drawing down her portfolio, butthen the market's down 30% or
40%?
That is really puttingsignificant pressure on the

(07:31):
portfolio, probably drawing downthe portfolio too quickly, and
then that is gone.
So yes, there's a great socialsecurity benefit, but there's no
more liquid reserves.
There's not an additional amounton top of that, depending, of
course, on the portfoliobalance.
And then number four, you mightjust want flexibility.
One thing that's important toknow is not all years are
created equal.
Your early years of retirement,you're spending a whole lot
more, you're doing a whole lotmore, you're traveling, you're

(07:53):
enjoying.
Your later years of retirement,probably not as much.
So there's something to be saidof do you take it now?
Do you enjoy it now?
Now that mindset very much needsto be kept in check because we
have a tendency as people toover-prioritize gratification
today and under-prioritizegratification in the future.
So yes, it can provide far moreflexibility to take social

(08:13):
security today to enjoy ittoday, but make sure you're not
doing that at the cost of yourtomorrow.
So finally, in closing, delayingsocial security until 70 is not
a one-size-fits-all solution.
It's one potential strategy.
And like any strategy, it onlyworks if you first examine your
income, your tax situation, andyour overall strategy to see if
that makes most sense for you.

(08:34):
So before you decide to collectat age 70, run the numbers both
ways.
Say what factors are mostimportant to me?
How will each impact myinvestments, my tax strategy, my
flexibility, and then make thedecision that's best for you.