A 24% lifetime raise is there for the taking, yet 90% of workers say they’ll claim Social Security before age 70. The decision is worth up to $100K+ in extra income for the average household—and the tax savings can be even larger.
Waiting until 70 to flip the Social Security switch increases every monthly check by 24% versus claiming at 67 and by 77% versus claiming at 62, an advantage Schroders calls “the clearest guaranteed return in retirement finance.”
Despite the math, only 10% of pre-retirees plan to wait, according to the firm’s 2025 survey of 1,500 American workers. The other 90% are walking away from a figure that can surpass $100,000 in cumulative benefits for a married couple, even after adjusting for inflation and earlier cash-flow needs.
The 24% Raise That Compounds for Life
Benefits are calculated using a formula that applies Delayed Retirement Credits (DRCs) of 8% per year between full retirement age—now 67 for anyone born in 1960 or later—and age 70. The credit is permanent; once the higher amount is locked in, COLAs are applied to the larger base.
- Primary Insurance Amount at 67: $2,000 a month
- Benefit at 70 with DRCs: $2,480 a month
- Extra annual income: $5,760
- Breakeven age versus claiming at 67: 81
- Lifetime surplus for couple both waiting: ~$103,000 assuming both live to 88, the Society of Actuaries joint-life expectancy for 65-year-olds.
“That 24% raise is risk-free, inflation-linked and taxed more favorably than 401(k) withdrawals,” says Melanie Musson, finance analyst at Quote.com.
Tax Alpha: How Delaying Slashes Your IRS Tab
Social Security is taxed on a provisional-income schedule that maxes out at 85% of benefits. By contrast, every dollar pulled from a traditional IRA or 401(k) is fully taxable. Claiming early while simultaneously taking RMDs can shove retirees into a 22% or 24% bracket and trigger IRA withdrawal surtaxes and higher Medicare premiums.
Chris Dixon, co-founder of Oxford Advisory Group, frames the tactic as “asset-location arbitrage.”
Case: A 67-year-old couple needs $75,000 of after-tax spending money. They can:
- Claim now, collect $48,000 of SS and pull $35,000 from a 401(k). Taxable income: $77,800.
- Delay SS, live on $75,000 of Roth conversions and cash. Taxable income: $0-$12,000 for three years, then collect $59,520 of SS at 70 and reduce portfolio withdrawals.
“The second path often lowers lifetime taxes by six figures and extends portfolio survival by 3-5 years,” Dixon calculates.
Why Most Still Hit the Button Early
The top three reasons Schroders respondents cited:
- Need the cash flow immediately (48%)
- Don’t trust the system to be solvent (28%)
- Don’t expect to live long enough to breakeven (19%)
Behavioral-finance studies label the last point “longevity pessimism.” Yet the IRS’ most recent life tables show a 65-year-old man has a 55% chance of reaching 85; a woman, 65%. For couples, at least one spouse has an 89% chance of reaching 85.
“The insurance value of the higher benefit dominates when you frame Social Security as a joint-life annuity you cannot buy anywhere else,” Dixon notes.
The Bridge Strategy Investors Use Instead
Advisers increasingly build a “Social Security bridge” that funds ages 62-70 with portfolio withdrawals, Roth conversions or part-time income. The approach front-loads tax planning and back-loads guaranteed income, a combination that has outperformed a 60/40 portfolio in 87% of Monte Carlo simulations run by Vanguard’s investment strategy group.
“Clients hate the idea of spending down assets early, but the math shows the bridge leaves more legacy wealth two-thirds of the time,” Musson says.
Bottom Line for Your Portfolio
Unless you have a known health issue or a 100% portfolio success rate at a 4% withdrawal rate, delaying Social Security is the highest-return, lowest-risk ‘allocation’ available. The 24% credit beats today’s long-term A-rated corporate bond yields by roughly 700 bps and adjusts for inflation.
Investors who integrate the delay with tactical Roth conversions and Medicare-income bracket management can create after-tax alpha of 1.5%-2% a year, according to analyses from both Schroders and Quote.com.
Ignore the herd: the line at the Social Security office is not a signal—it’s a costly convenience.
Get the fastest, most authoritative breakdown of every market-moving retirement rule change, tax tweak and yield opportunity at onlytrustedinfo.com—bookmark it now and never leave retirement money on the table again.
