Why Delaying Your Social Security Benefit Makes Sense

In a previous article, we discussed three good reasons why FERS retirees should delay their Social Security benefit until age 70. If you need more convincing, here are three more.

COLAs Still Increase Your Primary Benefit Even When You Delay

Back in 2023, Social Security beneficiaries received an 8.7% Cost Of Living Adjustment (COLA) — the highest in four decades. Unfortunately, too many people mistakenly believed that they would miss out on the increase if they didn’t file for Social Security ASAP.

Not true. You may be surprised to learn that COLAs are automatically added to your primary insurance amount even though you haven’t filed for benefits, yet. Even better — when you delay Social Security until age 70 to maximize your benefit, all of your COLAs from that point on are larger because the increase you get is based on your larger benefit.

Your Surviving Spouse Receives A Larger Social Security Benefit

When a federal retiree passes away, their widow(er) loses 50% to 75% of the FERS pension depending on which survivor benefit was elected at retirement. They’ll also lose as much as half of the couple’s combined Social Security income because, when one spouse dies, the surviving spouse can only receive the higher amount of the two Social Security checks. As you can see, delaying Social Security until age 70 to maximize your benefit, provides your widow(er) with more income when you pass away.

“Yet, despite this information, only 8% of current retirees delay Social Security to maximize their benefit. Don’t be one of them.”

You Have More Time To Spend Down Your Traditional TSP

Since contributions to your traditional TSP are deducted from your pre-tax earnings, your balance remains tax-deferred until you start taking distributions in retirement. If you haven’t taken any TSP distributions by age 73 when Required Minimum Distributions (RMDs) kick in, you’ll likely end up in a much higher tax bracket.

Delaying Your Social Security until 70 gives you time to spend down your traditional TSP throughout your late 50s and 60s. As a result, you can spread out the taxes you owe Uncle Sam before you need to take RMDs at 73.

What Doesn’t Make Sense

According to a recent article published on CNBC.com, most people know that filing as early as age 62 for Social Security will reduce their benefit by 30%. And many also know that delaying their benefit until age 70 can increase their benefit by about 124%. Yet, despite this information, only 8% of current retirees delay Social Security to maximize their benefit. Don’t be one of them. Connect with an FRC® trained advisor who can help you calculate your maximum Social Security benefit.