The average American aged 65 to 74 had about $609,000 in retirement savings as of 2022, according to data from the Federal Reserve. But the median retirement account balance for that age group was just $200,000.
This tells us that the latter number -- $200,000 -- is more representative of older Americans' savings than $609,000. It also tells us that a lot of retirees could probably use a boost to their Social Security benefits to make up for limited savings.
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If that's the boat you're in or expect to be in, you may be eager to get more money out of Social Security. The good news is that there's a pretty easy way to guarantee a larger monthly benefit for life. But you'll need to make sure this specific strategy works for you.
Waiting could really pay off
You're entitled to your complete monthly Social Security benefit, based on your individual income history, when you reach full retirement age. That age hinges on your year of birth and is 67 for anyone born in 1960 or later.
However, the Social Security Administration will reward you with an 8% increase to your monthly benefit for each year you delay your claim beyond full retirement age. While that incentive runs out at age 70, if your full retirement age is 67, you have an opportunity to grow your monthly checks by 24% -- for life.
That's a fantastic deal since there are few opportunities that allow you to earn 8% on your money each year without taking on any risk. Buying stocks, for example, might yield a similar return, but you'll also risk losing money in the event of a market downturn. By delaying your Social Security claim past full retirement age, you're guaranteed an 8% yearly boost.
Make sure a delayed filing works for you
If you're nearing retirement and aren't confident in the amount of money you've saved to date, it could be a great idea to delay your Social Security claim for a larger benefit each month. But before you decide to file for Social Security at 70 for a 24% boost, consider the state of your health and your family history.
Claiming Social Security at 70 or at another point beyond full retirement age could result in larger payments each month. But it won't guarantee a larger lifetime Social Security payday.
Remember, a delayed filing means missing out on months or years of benefits. If you end up living well into your 80s or 90s, a Social Security claim at age 70 could easily result in more lifetime income than a filing at full retirement age. But if you pass away in your mid-70s, you'll generally be shorting yourself on lifetime Social Security income by delaying your filing until your 70th birthday.
That's why you must take your health and family history into account when making your choice. Delaying Social Security is a simple way to get more money from the program each month, but getting your money sooner might be a financially better choice.
If your health is average when full retirement age arrives and your parents lived long lives, there's nothing wrong with delaying your Social Security claim a few years. But you may not want to do that if you have health issues already and your parents both passed away during their 70s.
