Why Don't More People File for Social Security at 70?

There's a reason 62 is the most popular age to file for Social Security -- it's the earliest age you're allowed to get at those benefits. On the other hand, 70 is a fairly uncommonage to claim Social Security. As my colleague Sean Williams reported last year, only 3% of all seniors wait until 70 to take benefits. And this can only mean one thing -- that a glaring number of beneficiaries are making a huge mistake.

The problem with not waiting

To understand why it's troublesome that so few people claim Social Security at 70, let's review how the program works. In a nutshell, your benefit payments themselves are calculated based on your 35 highest years of earnings. Once your base benefit payment is established, you'll be eligible to collect it in full upon reaching what's known as full retirement age.

Your full retirement age is based on your year of birth, as follows:

That said, you actually have an eight-year window to start collecting Social Security. As stated above, you can access your benefits as early as age 62, but if you do, you'll face a reduction in payment for every year you file before your full retirement age. For example, if your full retirement age is 66 but you take benefits at 62, you'll only end up with about 75% of your base benefit amount.

Now here's where things get interesting. If you hold off on Social Security past your full retirement age, you'll accumulate what are known as delayed retirement credits. These credits accrue up until age 70 and result in an 8% benefits increase per year. This means that if your full retirement age is 66 but you wait until 70 to claim Social Security, you'll end up collecting 132% of your base benefit amount -- for life.