Benefits of Delayed Retirement

Those born in 1943 or later receive 8 percent more benefits a year for every year they wait to draw Social Security benefits past the full retirement age. This is called the delayed retirement credit.

People retiring at age 66 this year would get their full benefit. But if they wait until age 70, they would get 32 percent more. Social Security benefits are thus 57 percent higher at age 70 than at age 62.

The delayed retirement credit is an extraordinarily good deal – where else can one get a guaranteed 8 percent annual return these days?

Bruce Bartlett.

Comments (9)

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  1. Dr. Steve says:

    This assumes your medicare will provide the insurance benefit to extend your life. As both Medicare and social security become means tested the 8% may vanish anyway.

  2. A.D. says:

    I know for sure that I m a huge fan of the delayed retirement benefits!

  3. Devon Herrick says:

    University of Chicago economist, Steven Levitt (co-author of the book, Freakonomics)has identified another benefit of delaying retirement — a longer life. I don’t recall all the details, but (as I recall) people engaged in work live longer than those who retire even after controlling for health status.

  4. Angel says:

    I am a proponent of extending the retirement age, especially as life expectancy is going up.

  5. ColoComment says:

    Yes. At 8%, it’s about the safest and best return available.

    I soon will turn 67, am working full time, signed up for Medicare at 65, recently began taking spousal benefits (all of which I am banking), and will delay taking my full SS as long as I can (up to 70, after which it no longer increases.)

    Part of my incentive for taking the spousal benefit now, even though I do not presently need it for income, is that it becomes MY property, which, if I do not eventually spend it, my children will inherit on my death.

    At the risk of tempting fate, I believe I’m trying to “have my cake and eat it too,” which my mother always claimed could not be done!

  6. bart says:

    Wouldn’t you need to reduce the 8% to account for fewer years collecting benefits?

  7. bart says:

    Seems like a wash if you had a remaining life expectancy of 12 years or so.

  8. Gabriel Odom says:

    It might be a bit more than 12 years. We are expecting more people to break the 100-year-old mark than ever before.

  9. Mulligan says:

    Devon brings up an interesting point. People do tend to die when they retire… So the benefits of delaying might be a bit understated.