How to Get Half a Million More From Uncle Sam for Your Retirement

— -- What if I told you there’s a way to get 30 percent more Social Security money from the government? It’s true. And it’s legal!

So, how do you pull off this fabulous financial coup? Simply delay when you start taking Social Security. That’s it. We told my mother-in-law this when she retired, but she didn’t listen. Will you?

Here’s how it works. We’re allowed to start taking Social Security as early as age 62. But if you take the benefit that early you get a seriously reduced benefit.

That’s where that 30 percent figure comes from. You get 30 percent less. By contrast, if you wait until full retirement age, or beyond, you get way more money.

What is full retirement age? It’s a moving target, depending on when you were born. It’s age 65 for people born in 1938 and then gradually steps up to age 67 for people born after 1959. (Don’t you love how the government can make things complicated?)

To truly understand the power of waiting, let me run a sample scenario for you. Let’s say your birth year was 1965 and your annual income was $40,000. Here’s what you would receive in Social Security, retiring at different ages, according to the government’s own calculator:

Age 62: $1,607 monthly benefit

Age 67: $2,729 monthly benefit

Age 70: $3,780 monthly benefit

Those are jaw-dropping differences. In this case, waiting until your full retirement age of 67 gets you an additional $1,122 a month. Even more astounding, hold off just 3 more years and you’ll get an extra $2,173 a month!

Delaying Social Security is a decision with a ripple effect that can last 20 years. Thinking of it as “a 20-year decision,” I originally did the math for that same hypothetical person born in 1965 and making 40 grand, but stretched out over 20 years:

Age 62: Benefit over 20 years: $385,680

Age 67: Benefit over 20 years: $654,960

Age 70: Benefit over 20 years: $907,200

Wow. If that were you and you waited until age 67, you would get an extra $269,280 over 20 years. And if you were to wait until age 70, you would receive an extra $521,520. (Actually, you’d get more than that, because these figures don’t take into account cost-of-living adjustments over the 20 years.)

But there’s another way of thinking of it. Several people wrote in asking me to compare how much social security the same person would receive if they started taking it at age 62 versus 67 versus 70 and kept taking it until age 90. Here’s how that scenario looks:

Age 62: Benefit over 28 years: $539,952

Age 67: Benefit over 23 years: $753,204

Age 70: Benefit over 20 years: $907,200

The benefit for those who wait until age 67 is still $213,252 more. And those who wait until age 70 will receive an impressive $367,248 more. (Again, this is simplified math that doesn’t include cost-of-living adjustments over the decades.)

Here’s the point. We are living longer. According to the Centers for Disease Control, the average life expectancy is now 78.8 years, but remember that’s an average. In order for that to be the average, a huge chunk of people have to be living far longer than that. So you could easily be cashing those checks until you’re 90 or more.

I simply want to encourage people to actively think about what will be best for them. If you have a chronic illness, taking Social Security sooner could be for you. If you’re in good health and come from a long-lived family, waiting may be the way to go. Want a better idea of your own personal life expectancy? Believe it or not, the Social Security Administration has a life expectancy calculator, and you can try it here.

Now, I know what some of you are thinking because it’s what my mother-in-law was thinking. You’re sick of your job and you don’t want to stay an extra second, let alone an extra five to eight years.

Well, you may not have to. If you have other forms of retirement savings, you might be able to live off of those first and then sign up for Social Security later. (Be sure to see a trustworthy financial adviser who can help you weigh the pros and cons.)

On the other hand, maybe you can pull off waiting for Social Security because you like your job. That describes my own parents and 40 percent of U.S. adults, who told Gallup pollsters they want to keep working.

Furthermore, in this day and age, we have all sorts of options. Work from home, work part-time, become a consultant, quit your serious job and become a barista or work in retail, whatever works.

The calculations in this article came straight from the Social Security Administration’s own website, using the “future dollars” option. Your own Social Security benefit could be less —or more— than the examples shown here, because it will vary according to your year of birth and your lifetime income. You can try out the agency’s calculator yourself here.

Opinions expressed in this column are solely those of the author.

Elisabeth Leamy is a 20-year consumer advocate for programs such as "Good Morning America" and "The Dr. Oz Show." She is the author of Save BIG and The Savvy Consumer. Elisabeth is also a professional speaker, delivering talks nationwide on saving money, media relations, and career success. Elisabeth receives her best story tips from readers, so please connect with her via Facebook, Twitter or her website, to share your ideas.