J.P. Morgan’s bold Social Security advice: Wait until 70 to claim benefits and get up to 132% more – can you afford to hold off?

Retirement planning is all about maximizing your future income, and for most Americans, Social Security plays a critical role in that equation.

While you can start claiming benefits as early as 62, doing so comes with a significant tradeoff – smaller monthly checks for life.

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But what if you waited longer? J.P. Morgan’s latest Retirement Insights Report makes a bold case for delaying benefits even past full retirement age.

The firm says the smartest move for many retirees is to hold off until age 70 – a strategy that could boost Social Security payments by up to 132%.

Financial experts have long touted this strategy. Suze Orman calls delaying Social Security a “guaranteed way to boost retirement income.” But many Americans hesitate, fearing cuts to the program or simply needing the money sooner. So, is J.P. Morgan’s recommendation realistic? And what does this mean for your retirement plan?

Breaking down J.P. Morgan’s report

It’s no secret that Social Security’s future is a source of anxiety for millions of Americans. Will the money run out? Will benefits be slashed? J.P. Morgan’s report aims to ease these fears – at least for older workers.

The firm highlights that cuts to benefits are unlikely anytime soon. Why? Because older Americans have voting power.

According to the National Institute on Retirement Security, 87% of Americans say funding Social Security should be a top national priority regardless of deficits. And in the 2022 elections, 66% of voters were 45 or older, a group unlikely to let Congress make major cuts to their retirement lifeline.

“Taxes and benefits cuts are unpopular, so Congress may put off addressing the issue until closer to 2035, when the combined trust fund is projected to be depleted,” J.P. Morgan’s report said.

As for younger workers, there’s still uncertainty. That depletion timeline could result in changes that reduce benefits. But even if Congress takes no action, Social Security would still be able to pay 73% of scheduled benefits by 2098.

The bottom line? For those nearing retirement, the system is still on fairly solid ground – making the case for delaying benefits even stronger.

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Factoring in age

J.P. Morgan’s report argues that the ideal age to claim Social Security depends largely on life expectancy. If you expect to live past 81, wait until 70. You’ll get the highest possible benefit. If you don’t expect to live beyond 77, take benefits at 62.

“Our research indicates that waiting until age 70 to claim Social Security can boost benefit checks by 24% compared to claiming at full retirement age for those born in 1960 or later,” the company said in a news release announcing the report. “On the other hand, starting benefits early at age 62 means receiving only 70% of the full retirement amount, resulting in a permanent reduction. It’s crucial to understand the benefits and tradeoffs of claiming decisions.”

Gender also plays a role. Women, on average, live longer than men (80.2 years vs. 74.8 years), according to the National Center for Health Statistics. That makes delaying Social Security an even smarter move for many. Looking at your age, current financial standing and current physical health will help you select the optimal age for taking Social Security benefits.

The key takeaway? Your decision should be based on your health, financial situation, and longevity expectations – not just fear of missing out.

Filling in the gap

Of course, delaying benefits means you’ll need other sources of income to cover your early retirement years. Here’s how you can bridge the gap:

Invest for passive income: Stocks and real estate can generate returns to sustain you before Social Security kicks in. Consider blue-chip dividend stocks like Apple, Coca-Cola, or Microsoft for steady income, or real estate investment trusts (REITs) for real estate exposure without the hassle of property management.

Use a Health Savings Account (HSA): Medical expenses skyrocket as you age, and an HSA can help. Contributions are tax-free, and at age 65, you can withdraw funds for Medicare premiums, long-term care, and other health costs without penalties.

Work part-time or freelance: A flexible job can help cover early retirement expenses while giving your Social Security benefits time to grow.

J.P. Morgan’s recommendation may seem bold, but it’s rooted in math: The longer you wait, the more you get. While it’s not the right strategy for everyone, those in good health with other income sources may find that holding off until 70 is a smart financial move.

The big question is: Can you afford to wait? If so, the payoff could be well worth it.

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This article provides information only and should not be construed as advice. It is provided without warranty of any kind.