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Terry M. thought she was playing it smart. The 80-year-old retired nonprofit director from Portland, Oregon, waited until age 75 to claim Social Security benefits, believing she’d maximize her monthly payments. Instead, she discovered a costly mistake that’s haunting her golden years.
“I wish someone had explained to me that Social Security stops growing at 70,” Terry reflected during a recent interview. “I always found that so confusing and whoops, turns out I gave up five years of payments for absolutely nothing!”
Terry’s story illustrates a common but expensive Social Security timing mistake that costs retirees thousands of dollars they’ll never recover.
How a Social Security Delay Cost This Retiree
Born in 1944, Terry spent 35 years working for various nonprofit organizations in Oregon, eventually earning $120,000 annually as an executive director before retiring in 2014 at age 70. Her plan was simple: Delay Social Security as long as possible to maximize benefits.
“I kept hearing about how your Social Security grows by 8% each year you delay past full retirement age,” Terry explained. “I figured waiting until 75 would give me the biggest possible check. I thought I was actually being a genius!”
What Terry didn’t realize is that delayed retirement credits stop accumulating at age 70. For someone born in 1944, full retirement age is 66. Delaying from 66 to 70 increased her benefits by 32% — but waiting from 70 to 75 added nothing.
Based on her earnings history and birth year, Terry’s Social Security benefit at full retirement age (66) would have been approximately $2,380 monthly. With delayed retirement credits through age 70, that increased to about $3,141 monthly.
At age 75 when she finally claimed? Still $3,141 monthly.
Why Smart Retirees Make This Social Security Timing Error
Terry’s error isn’t uncommon among educated retirees. The 8% annual increase from delayed retirement credits sounds so appealing that many assume it continues indefinitely.
“I had a master’s degree and managed million-dollar nonprofit budgets,” Terry noted. “But I never took the time to really understand Social Security rules. I just assumed longer delays meant bigger benefits.”
Several factors contributed to her miscalculation, including advice from uneducated friends, confusion about different Social Security rules and an overconfidence in other savings.
How the Opportunity Cost Made Her Social Security Mistake Worse
Terry’s mistake wasn’t just about missing Social Security payments. That money could have been invested or used to enhance her quality of life during healthier years.
“Those were good years,” she shared. “I could travel, I had energy, my husband was still alive. I’m not saying I didn’t ‘live,’ but I might’ve been more aggressive with that whole enjoying your life thing.’”
The missed Social Security income also meant drawing down other retirement accounts faster. “I had to take larger 403(b) withdrawals to cover expenses,” Terry explained. “That money was invested and growing. The Social Security would have let me leave more of it alone. Oops!”
What This Oregon Retiree Should Have Done Instead
Social Security planning experts say Terry should have claimed benefits at 70 — the latest age that provides any increase.
For someone in Terry’s situation (born in 1944 with substantial earnings history), the optimal strategy would have been:
Claim Social Security at 70 to maximize delayed retirement credits.
Use Social Security to cover basic expenses while letting other investments grow.
Consider Roth conversions during the five years she was unnecessarily delaying benefits.
Social Security Warning Signs Every American Retiree Should Know
Terry’s experience highlights several warning signs that retirees might be making similar mistakes:
Believing Social Security benefits grow indefinitely: Benefits stop increasing at age 70, period.
Confusing different Social Security rules: Survivor benefits, spousal benefits and delayed retirement credits all have different rules and age limits.
Overestimating the value of waiting: The 8% increase sounds great, but it stops at 70. Waiting longer means forfeiting payments with no additional benefit.
Not considering opportunity cost: Social Security payments can fund current expenses while preserving other investments.
Social Security Advice for Today’s Retirees
Terry had some hard-learned wisdom for others approaching Social Security decisions. She thinks nobody should wait past 70; you should consider your health, marriage situation and lifestyle, and you should also get professional help if you’re confused. A fee-only financial planner or Social Security expert can run the numbers for your specific situation.