Should You Take Suze Orman's Advice to Delay Collecting Social Security? 6 Things to Consider

Suze Orman has made a name for herself dispensing financial advice -- in books, on TV, in podcasts, and in interviews. She has opined many times on Social Security and the importance of making sound decisions regarding it, and I find myself agreeing with much of what she has to say.

Here's a look at some of Orman's Social Security recommendations, along with some additional considerations.

Image source: Getty Images.

A quick Social Security primer

Each of us has a "full retirement age" at which we can start collecting the full benefits to which we're entitled based on our earnings over the course of our working lives. For those of us who haven't yet reached it, full retirement age will be 66 plus some months (depending on your birth year) or 67. It's 67 for those born in 1960 or later.

When to start collecting your benefits is a big decision. If you start collecting them early, you'll receive smaller monthly checks -- but you'll get more of them. You can also choose to delay beyond your full retirement age: This earns you delayed retirement credits that increase the size of your benefit checks by 8% per year (or 0.66% per month).

You can earn those credits up until you turn 70 -- so there's no point in waiting longer than that to claim your benefits. The table below shows the percentage of your full benefits you'll be entitled to receive at each starting age:

Source: Social Security Administration.

What does Orman say?

Basically, Orman recommends delaying claiming your Social Security benefits: "I am never going to stop pushing each of you to remain open to the value of waiting to claim your Social Security benefit if you are not dealing with a life-shortening illness."

In a recent Facebook post, she said:

The best retirement planning advice for women in a relationship today is to think through what might work best for a much older you who might eventually be living alone. If your household expects Social Security to cover a lot of the essential bills in retirement, it is crucial to be smart about when to start receiving benefits. When a spouse dies, the survivor is entitled to collect just one benefit. That can be the survivor's benefit, or the benefit of the deceased spouse. ...

The smart strategy is to have the highest earner in the household wait until age 70 to start collecting Social Security. The benefit when you start at age 70 is the highest possible payout; it's more than 75% higher than if you start at age 62. By having the highest earner wait, you are protecting the eventual surviving spouse, who will be able to keep collecting that maximum payout.

Some Social Security considerations

Is delaying until you're 70 the best choice for everyone? Not at all. One study found that delaying until 70 would be the optimal financial choice for about 57% of us -- not 100%. Here are six issues to consider as you think about whether waiting until age 70 is best for you:

1. Your health: Orman herself has stressed that healthy retirees would be best served by delaying because they're more likely to live longer-than-average lives. However, if you're not in the best health and feel there's a decent chance that you'll have a shorter-than-average life, claiming early can make a lot of sense.
2. Your working status: If you're still working and you claim your benefits before your full retirement age, for each $2 you earn above a certain threshold, you'll have $1 of your benefits withheld. That drops to $1 for every $3 over a much higher threshold in the year you reach your full retirement age. It's not all bad, though: Those withheld benefits will be factored into your future benefits after you reach your full retirement age, so they're not exactly lost.
3. Inflation: If you're worried about inflation, it can be good to delay and maximize your benefits, because Social Security usually provides annual cost of living adjustments (COLAs). The bigger your benefit, the more you'll get from each year's percentage increase.
4. Your investments: If you claim your benefits early, that may allow you to avoid tapping your nest egg as much, permitting it to grow more. If you delay claiming, you may have to deplete your nest egg faster.
5. Your lifespan: As noted earlier, if you stand a good chance of living a very long life, that's great -- but for many people, it also increases the danger of running out of money. Delaying and thereby maximizing your Social Security benefits will provide you with more income in your later years, when your nest egg may be low or gone.
6. Social Security's stability: The Social Security program is not exactly running out of money, but it is facing a shortfall in the coming years. If Congress and the White House do nothing to strengthen the program (and there are multiple possible ways to fix it), within a decade, it will only have enough money coming in to pay beneficiaries 83% of what they are entitled to. On top of that, President Trump is floating policy changes that could hurt the long-term viability of the program. In other words, the program's future is less certain than it was a few years ago, so out of caution, some seniors might want to turn on the spigot early.

So take Orman's recommendations to heart, and see whether delaying the day you start taking Social Security benefits would be the best move for you.