It’s impossible to get in front of every financial decision your clients make, but on the topic of Social Security, it’s worth stepping in. Only 5% of men and 7% of women wait until age 70 to file for retirement benefits, despite the fact Social Security generously rewards those who delay until that age.

Undeniably, many people need the benefits in their 60s to pay bills or blunt the effects of inflation. People with shortened life expectancies may choose to claim benefits as soon as possible for obvious reasons.

But those who could delay often don’t. They may be eager to collect from a system they’ve been paying into since their teens or 20s. Or they haven’t evaluated all their options and tell you, “I’ve decided to file for Social Security.” Or, worse, “I’ve filed for Social Security.”

Depending on a client’s situation, it might be time for a tough conversation to suggest one or more of these five ways to delay filing for Social Security or, if possible, stop or suspend their benefits.

1. Keep working. Layoffs dominate the news today, but many organizations still can’t find enough qualified workers. Some have woken up to the benefits of retaining experienced employees for the organization's good. 

Suggest that clients don’t leave their current job if they can stay or find a way to semi-retire and earn money to bridge the time until age 70. You may have clients who could unretire.

An overlooked benefit of working is that clients continue to pay into Social Security and acquire the “credits” that ultimately determine their benefit when they file.

Some work status changes could mean clients lose employer-sponsored benefits. You’ll need an associate who can help them with health insurance. Clients who are at least 65 are eligible for Medicare. If under 65, they may be able to buy an individual plan through a state or federal government exchange or be covered as a dependent on a working spouse’s plan.

2. Take withdrawals from individual retirement accounts (IRAs), 401(k)s, or other tax-advantaged accounts. Many clients probably thought they’d wait until the age that required minimum withdrawal (RMD) rules say they must begin withdrawals. That age was 70½ only a few years ago. But Congressional action raised it first to 72, then to 73 this year, and to 75 in 2033.   

However, after age 59½, there is no penalty for tapping an IRA or 401(k). And depending on the balance, clients could be able to use some of their savings to help them delay Social Security.

This is where you prove the value of your advice. Using software that can project Social Security benefits for a client and spouse at different ages and evaluate the tax liabilities of withdrawals, you can look for potential solutions for other income while they wait to file for benefits.

3. Consider income annuities to provide a guaranteed income stream. There’s been a resurgence of interest in annuities. Companies that issue them have innovated these products to fit the needs of retiring boomers for income stability and hedging volatility in their portfolios.    

Annuities are, of course, not guaranteed by the government, and they come with fees. The issuing insurer’s financial stability and the effects of fees on portfolio values are factors to consider when discussing annuities with clients.

4. If widowed or divorced, a client may be able to take benefits based on a deceased spouse’s benefit and wait to claim theirs. If a client is divorced or widowed, they may have other options. They may be able to file for a survivor’s benefit based on a departed or ex-spouse’s earnings record and delay filing for their own, potentially more significant benefit, at 70.

There are eligibility guidelines, of course, so if this isn’t your area of expertise, consult someone who has passed certifying exams in Social Security benefits and specializes in them.  

5. Can’t wait until 70? Then see if a client can delay just a little longer. With Social Security, 62 is when a client can file and receive a reduced benefit. Waiting until the next important age—full retirement (FRA)—yields a significant benefit. For those who turn 65 this year, the FRA is 66 and 8 months. It tops off at 67 for those born in 1960 or later.

Between full retirement age and 70, clients earn delayed retirement credits (DRCs) monthly that accumulate at an effective annual rate of 8%. Ask your client, “When was the last time you got a pay raise of 8%?”    

A Final Note
You may hear clients express anxiety about the future of Social Security. You’re not a soothsayer, but you can remind them that benefits rise with inflation, and they will profit from those COLAs even while on the sidelines.

You can also assure them that changes to Social Security will not affect any who is already eligible for benefits, i.e., those who have turned 62 and were born before 1961. 

Finally, wrangling over Social Security funding continues in Washington. President Biden has proposed substantially increasing funding for Social Security. Of course, there’s no predicting what will happen, but history and electoral politics provide some comfort.

Paul R. Samuelson is the chief investment officer and co-founder of LifeYield. Alyson Dorosky, CSSCS, is LifeYield’s head of Social Security Support.