Social Security: Two Underestimated Factors Before You Automatically Delay Until Age 70
If you’ve spent any time researching when to claim Social Security benefits, you’ve almost certainly heard the same advice repeated everywhere: delay, delay, delay.
On the surface, the math appears to support it. Here are the maximum monthly benefits in 2026 for someone who earned at or above the taxable wage base for at least 35 years:
| Claiming Age | Max Monthly Benefit |
|---|---|
| Age 62 | $2,969 |
| Age 67 | $4,207 |
| Age 70 | $5,181 |
Waiting from age 62 to 70 adds $2,212 per month — permanently. That’s $26,544 more per year, every year, for the rest of your life.
It seems like an easy decision. But before you accept the conventional wisdom without question, there are two factors that are consistently underestimated — and in some cases, completely overlooked — that deserve a serious place in your thinking.
First, a Critical Premise: The Earnings Test
Before we get to the two factors, there’s an important constraint to understand if you’re still working and considering claiming early.
If you claim Social Security before your full retirement age (FRA) of 67 and continue earning income, the Social Security Administration will temporarily reduce your benefit based on how much you earn:
| Situation | Annual Earnings Limit | Reduction |
|---|---|---|
| Under FRA for the entire year | $24,480 | $1 withheld for every $2 earned above the limit |
| Reaching FRA during the year | $65,160 | $1 withheld for every $3 earned above the limit |
| FRA or older | No limit | No reduction |
For most of those reading this who are still working in their early 60s and earning well above these thresholds, claiming before your FRA at age 67 while still employed simply doesn’t make sense. The earnings test alone makes it a non-starter.
But here’s the question that rarely gets asked: should you automatically wait all the way until 70?
That’s where the two underestimated factors come in.
Factor #1: What Delaying Actually Costs You
The conventional delay argument focuses entirely on what you gain by waiting — a higher monthly check at age 70. What it conveniently ignores is what you give up to get there.
When you delay Social Security from age 62 to 70, you are making a choice, whether you realize it or not, to spend down your investment portfolio to replace the income you could have been receiving from Social Security.
Let’s look at the math.
If you were to claim your benefit at 62 as illustrated above, instead of at age 70, that’s $2,969 per month you now don’t have to withdraw from your investment portfolio to make up for the shortfall created by delaying.
Assuming for a moment that you could earn a 7% annualized return on those funds that instead remained invested over the next eight years (96 months) until you turn 70, you would have potentially accumulated $380,622 that you wouldn’t have if you had chosen to wait to start collecting benefits until age 70. That’s $285,024 in withdrawals not made and $95,598 in potential investment growth.1
Had you waited to collect until age 70, your benefit would have been $5,181 per month, an increase of $2,212 over what you would have received at age 62. However, you wouldn’t potentially have the $380,622 accumulated above.
To “break even,” you would have to live another 172 months (14.34 years) to age 84.
There’s also something else hiding in this decision that almost nobody talks about: the inheritance factor.
Every dollar you pull from your investment portfolio between age 62 and 70 to replace the Social Security income you deferred is a dollar that is no longer compounding for your family. For clients who have built significant wealth and whose Social Security benefit is a supplement rather than a lifeline, spending down investments to delay a government benefit may actually reduce what your children and grandchildren ultimately inherit, while simultaneously increasing your dependence on a government program for your monthly cash flow.
That tradeoff deserves to be on the table and must be considered before quickly following the conventional wisdom of delaying benefits to age 70.
Factor #2: Political Risk — Don’t Assume the Rules Stay the Same
The second underestimated factor is one that makes people uncomfortable to discuss, but I believe it’s irresponsible not to bring it up: political risk.
Social Security, as currently structured, is not financially secure beyond approximately 2033 according to the program’s own trustees. At that point, reserves will be depleted and only about 77% of benefits will be payable.
Something will have to change. The only real question is what — and who bears the cost.
There are essentially four options on the table:
- Cutting benefits for current recipients is political suicide. No elected official wants to touch it.
- Raising the eligibility age is deeply unpopular, especially for workers in physically demanding jobs who simply can’t keep working into their late 60s.
- Raising payroll taxes on the existing workforce, currently 6.2% each from employees and employers on wages up to $184,500, is unpopular and faces significant resistance.
- That leaves the option that, historically, has proven the most politically workable: means testing — reducing benefits for those deemed least in “need.”
We’ve seen this movie before. In 1983, up to 50% of Social Security benefits became taxable for higher-income recipients. In 1993, that threshold was raised to 85%. Critically, those income thresholds have never been indexed for inflation — meaning more middle-class Americans have been quietly swept into higher taxation of their benefits every single year since.
We see the same dynamic play out with Medicare’s IRMAA surcharges. Most people currently pay $202.90 per month for Medicare Part B. But higher-income recipients pay $689.90 per month for the exact same benefits. Add Part D surcharges, and a couple in a higher income bracket pays as much as $1,156 more per month — or $13,872 more per year — than their neighbor for identical coverage. Over 20 years, that difference compounds to over $277,440, and that assumes no future increases.
The question you need to ask yourself is this: If politicians have already used means testing to quietly increase the costs, thus reducing the value of Medicare benefits for higher earners — with little political resistance — what would stop them from applying the same approach to Social Security?
A reduction or elimination of your COLA adjustment. A tiered benefit structure based on total household income or net worth. A gradual reduction in the benefit itself for those above certain thresholds.
None of these are far-fetched. All of them pass the political “fairness” test that elected officials require to get something done in Washington.
What This Means for You
I am not suggesting that delaying Social Security is the wrong decision in every instance. For some reading this, it may very well be the right one, particularly for the higher-earning spouse in a couple, where maximizing the survivor benefit carries enormous long-term value.
What I am suggesting is that the decision deserves more than a simple rule of thumb.
The answer likely depends on your health and life expectancy, the strength and flexibility of your investment portfolio, your tax situation, your income needs, and your honest assessment of how much political risk you’re comfortable absorbing from a program that faces real structural challenges in the years ahead.
This is exactly the kind of decision a second opinion and evaluation of your retirement plan is designed to help you navigate, not with a generic answer, but with a strategy built around your specific situation.
If you haven’t had a detailed conversation about your Social Security strategy and how it fits into your overall retirement plan, we invite you to schedule a complimentary Retirement Strategy Assessment today.
1 This illustration is hypothetical and provided for educational purposes only. It assumes a 7% annualized rate of return and does not reflect actual investment results. The example does not account for market volatility, fees, expenses, taxes, or individual circumstances. Actual results will vary and may be materially different.
This is intended for informational purposes only. You should not assume that any discussion or information contained in this document serves as the receipt of, or as a substitute for, personalized investment advice from Savant.