Delaying Your Social Security Has Rarely Been This Profitable

It's no secret that delaying the start of Social Security benefits typically means you'll get more money in retirement. And waiting just got even more worthwhile thanks to the program’s big cost-of-living adjustment set for next year.

Here's why: Even if you don't collect benefits, the COLA adjustment — 8.7% for 2023 — still gets factored into the amount you're eligible to receive starting at age 62. And it gets compounded, so each year you hold off on collecting to full retirement age (somewhere between 66 and 67 depending on when you were born) or beyond will make your eventual payout even juicier. The benefit increase stops when you reach age 70.

“COLAs magnify the disparity between early and late claiming,” Elaine Floyd, a certified financial planner and author of Savvy Social Security Planning for Boomers, wrote in 2013 when the COLA was just 1.5%. “We can assume that all Social Security recipients celebrate when a generous COLA is announced. But some recipients celebrate more than others.”

Figuring out how to maximize Social Security is vital considering it's a benefit that lasts for the duration of a recipient's life and is adjusted for inflation. The same can't be said for most, if any, other sources of income. About half of Americans 65 or older rely on Social Security for at least 50% of their household income. (For about a quarter of those 65 and over, it’s at least 90% of their income.)