3 strategies to realistically delay Social Security

If you qualify for Social Security, you can take it as early as age 62 or delay it as late as age 70. There are pros and cons for each option, and the optimal choice will be unique to you.

If you decide that waiting is the right decision, needing the money could prevent you from following that choice. But there are some actions you can take in advance that can help prevent this.

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How Social Security works

You receive your standard benefit from Social Security if you retire at your full retirement age (FRA). That number is 66 if you were born between 1953 and 1954, 67 if you were born after 1960 and somewhere in between if your birth date falls anywhere from 1955 to 1959. If you take your benefit early, it will be reduced for every month that you take it early; if you delay it past FRA, you will get a pay increase for every month that you take it late.

For example, if your FRA is 66 and your standard benefit is $2,000 a month, your reduced benefit at age 62 will be $1,500 and your delayed benefit at 70 will be $2,640. The age at which you claim decides your monthly benefit, and how long you live determines how much you draw from the system over your lifetime.

If you live to 75, you will draw $234,000 if you begin taking benefits at 62, $216,000 if you claim at 66, and $158,400 if you start at 70. If you live to 80, you will get $324,000 if you start at age 62, $336,000 if you start at 66, and $316,000 if you begin at 70. If you live to 85, you'll get $414,000 if you start at 62, $456,000 if you start at 66, and $475,000 if you begin claiming at 70.

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How to delay Social Security when it makes sense

The longer you live, the more sense it makes to delay Social Security until your FRA or age 70. And while predicting how long you live is impossible, things like general good health and a family history of longevity could lead to a higher probability of living a long and happy life. But what if your need for money outweighs your desire for maximizing this benefit? There are a few things you can do:

1. Work longer

You can consider working longer than you planned. Even if you are set on early retirement, working just enough to cover what Social Security would pay you if you took it early may be all that you need. Especially if you've reduced your expenses considerably, working part-time may be plenty, allowing you to semi-retire. You can use the rest of your time pursuing goals like hobbies, spending time with family, and traveling.

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2. Save more, and earlier

Saving enough for retirement can already be challenging. But the more time you have, the more that stock market appreciation can help -- and you can potentially reach your goals with lower contributions. Studies have shown that keeping your withdrawal rates at 4% a year or under could be the trick to maintain your assets in retirement; taking out the equivalent of $1,500 a month would equal an annual withdrawal of $18,000. Using a 4% withdrawal rate, you would need a balance of $450,000.

Saving this amount of money with 5 to 10 years until you need it is very hard, but if you have 20 to 30 years, you can accomplish this goal by investing significantly smaller amounts annually. If you can save $3,750 each year and earn 8% on average every year, you can grow your accounts to $450,000 in 30 years. If you have less time, you can do it with either a higher contribution amount or a higher rate of return. For example, you would need to save about $9,000 annually to grow your accounts by this amount in 20 years at an 8% rate of return; but if your rate of return increases to 9%, the amount you needed to save each year would decrease to $8,000.

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3. A little of both, with cost-cutting

What you might find is that the best approach is a combination of saving more and working longer or in a part-time job. Adding in efforts to cut your retirement expenses will also help.

No matter which path you choose, it will probably take some planning. The sooner you start thinking about when it's best for you to take Social Security, the more time you have for making any adjustments that would better allow it.