Millions of retired Americans today regard Social Security as an important source of income. And without those benefits, a good number of seniors would struggle to cover even basic expenses.

But one thing you should know about Social Security is that it’s not just your lifetime wages that will determine what monthly retirement benefit you get. Your filing age will also be a big factor in that decision.

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You’re allowed to sign up for Social Security as early as age 62. But you’re not able to get your full monthly benefit without a reduction until full retirement age arrives. That age is 67 for people who were born in 1960 or later.

There’s also tremendous upside to delaying Social Security past full retirement age. For each year you do, up until your 70th birthday, your monthly benefits get an 8% boost.

It’s not a given that claiming Social Security at 70 is the right move for everyone. But recent data reveals that sitting tight and waiting until age 70 could put a lot more money in your pocket.

Are you willing to give up a boatload of Social Security income?

A lot of people opt to claim Social Security before age 70 because they don’t want to wait that long to take benefits. But a 2019 United Income report found that the average household leaves $110,000 on the table by choosing the wrong time to start collecting Social Security.

The report also found that about 57% of retirees would enjoy more Social Security income in their lifetime by claiming benefits at age 70. But it also pointed out that only an estimated 4% of Social Security recipients wait until 70 to sign up for benefits, which means most retirees could be denying themselves thousands of dollars in extra retirement income.

Delaying Social Security could make sense — but not always

Holding off on Social Security until age 70 might make financial sense for a lot of people. And it’s something to consider if you’re approaching retirement with limited savings and are worried about covering your expenses on a long-term basis.

But that said, it doesn’t make sense for everyone to delay Social Security. And one thing you should know is that if your health isn’t particularly great, then waiting until 70 to sign up may not be a good idea.

It’s true that filing for Social Security at 70 will result in more monthly income. But it won’t necessarily give you more lifetime income unless you live long enough to make up for those years of not collecting benefits.

That’s why your best bet is to do a breakeven analysis. And here’s how that might work.

Let’s say you’re inclined to claim your $2,000 monthly Social Security benefit at your full retirement age of 67, but you’re wondering if it pays to wait until 70, since that would boost your monthly payments by $480.

A quick calculation tells us that by age 82 1/2, you’ll end up with the same lifetime Social Security payout — $372,000 — in either filing scenario. So here, 82 1/2 is your break-even age. And if you think you’ll live beyond that point, then it could pay to claim Social Security at 70.

All told, it’s a tricky decision. But it pays to consider holding off on Social Security if you expect to be very reliant on it as a retirement income source and you don’t have a reason to believe you may not live that long a life.

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