Many retirees once believed that holding off on Social Security until 70 guaranteed financial security, but reality hasn’t been so simple. Delays meant bigger checks, but they also had to deal with unexpected trade-offs that caught many by surprise. So, check out why some seniors now wish they’d claimed SS sooner, and what you can learn from it.
Shorter-Than-Expected Lifespan
Look, waiting until 70 only pays off if you live long enough to enjoy it. The break-even point is around age 79, so if you pass earlier, you actually lose out. Someone living to 75, for instance, would collect more by starting at 62 instead.
Immediate Need For Income
If you’re short on cash, delaying benefits can backfire fast. Many retirees end up swiping credit cards with sky-high interest or dipping into savings just to get by. That debt snowball can wreck long-term stability. Sometimes, it’s smarter to take the checks sooner in order to breathe easier.
Long-Term Care Expenses
Nursing homes and assisted living aren’t cheap. Some even top $60,000 a year. In case you’re forced to cover those costs, early Social Security payments will be able to provide for you before savings run thin. Waiting too long might leave you cash-strapped when you need help most.
Forced Liquidation Of Investments
Timing matters as much as returns when you’re retired. When you wait too long for Social Security, you might have to sell investments during a market downturn. That means locking in losses and missing the rebound, which is a painful move that hurts your nest egg more than you think.
Dependent Children Or Grandchildren
Social Security can help your kids or grandkids, too. Since you have dependents, claiming earlier can open years of valuable support for their education or care. Those family benefits usually cap at 50%, but the timing makes a huge difference.
Lower Spousal Benefits
Although waiting might sound wise, it doesn’t always boost your household’s income. The benefits for your spouse maxes out at 50% of your full retirement amount, not the delayed one. That means holding out can shrink what your spouse receives. This is something many couples overlook until it’s too late.
Out-Of-Pocket Medicare Premiums
Turning 65 brings a surprise: Medicare premiums don’t wait for Social Security. If you delay benefits, you’ll have to pay those monthly bills (about $175) directly from your pocket. The extra expense can strain your budget right when steady income matters most.
IRMAA Surcharges On Medicare
On the same note, the tempting 8% boost per year for waiting until 70 can actually be eaten up by Medicare surcharges. The government adjusts your premiums based on income, so higher delayed benefits can push you into an IRMAA bracket. It means hundreds more a year for the same coverage.
Higher Tax Burdens
Bigger checks often come with bigger tax bills. Nearly 85% of your Social Security can be taxed if your income exceeds $25,000. When you delay, those higher payments combine with other income to bump you into a steeper bracket, cutting into what you actually take home.
Legislative Risk To Delayed Benefits
Here’s the wildcard: the rules can change. Congress has already shifted retirement ages and may target higher earners next. The 8% delayed credit isn’t set in stone, so waiting too long could mean planning around promises that don’t hold up in the future.
