Social Security: Why delay claiming benefits even if your COLA is high?

Next year’s Social Security cost-of-living adjustment could be higher than the 2.8% benefit increase that beneficiaries experienced in 2026, according to the latest projections.

For this reason, some seniors may consider claiming Social Security retirement benefits now to ensure they benefit from a relatively large COLA, rather than putting it off later.

But experts say it’s generally better to delay, even if cost-of-living adjustments in 2027 turn out to be larger than average. Retirees receive higher benefits each time they delay claiming benefits until age 70, and annual COLAs can help drive that increase.

“You need to protect yourself from living too long, and you don’t want to have any regrets,” says James Mahaney, a certified financial planner and principal at Maverikas Retirement Services in Georgetown, South Carolina.

“Social Security is the best tool to get there,” Mahaney said.

Social Security benefits are adjusted annually through cost-of-living adjustments that aim to keep benefits up to pace with inflation.

According to recent estimates, Social Security COLAs in 2027 could range from 3.4% to 3.6%, which would be the largest increase in years as inflation remains high due to factors such as the Iran war.

Official calculations are typically released by the Social Security Administration in October.

The amount of the increase varies each year.

In 2026, approximately 75 million Americans experienced a 2.8% benefit increase in both Social Security and Supplemental Security Income benefits.

Annual COLAs rose to 5.9% and 8.7% in 2022 and 2023, respectively, the largest increases in decades due to high inflation. In other years, such as 2010 and 2011, the annual adjustment was 0%.

Official calculations for 2027 will be based on third quarter inflation data.

Mary Johnson, an independent Social Security and Medicare policy analyst, said the U.S.-Canada trade war, which economists expect to increase consumer prices, could have only a moderate impact on 2027 COLA estimates because it occurred late in the third quarter.

The pending COLA announcement comes amid growing calls for changes, including possible changes to how COLAs are measured, in the wake of the impending bankruptcy of Social Security’s retirement trust fund. The trust fund the program relies on to pay for retirement benefits is expected to be depleted within six years, at which point the monthly checks will be funded solely by payroll taxes. Without changes from Congress, millions of people will see their monthly benefits cut.

The Committee for a Responsible Federal Budget, a nonprofit group focused on educating the public on fiscal policy issues, proposed capping annual increases for the most significant beneficiaries.

Any potential changes to benefits would need to be enacted by Washington state lawmakers.

For now, experts generally recommend waiting to claim Social Security benefits unless personal circumstances, such as a poor health prognosis, suggest it might be better to start sooner.

Prospective Social Security recipients may worry that they will miss out on significant cost-of-living adjustments if they don’t apply for benefits soon.

However, according to research and financial experts, this is not necessarily true. And experts say waiting to claim benefits, even for months or years if possible, is one of the best ways to strengthen your financial security in retirement.

That’s because benefits increase by 8% each time a recipient waits past full retirement age until age 70.

The Social Security Administration provides benefit statements to pre-retirees who have not yet made a claim, including estimated monthly benefit amounts by claim age.

Eligibility for monthly retirement benefits begins at age 62. Full retirement age — 66 or 67, depending on year of birth — at which point 100% of earned benefits are paid. And at age 70, those who delay their claims can receive the largest dividend.

For example, retirees are eligible for $2,250 per month at age 62, $3,000 at full retirement age, and $3,960 at age 70, Mahaney wrote in a research paper published in July titled “Social Security’s Hidden Selectivity: Why It Pays to Wait to Check Your Annual COLA.”

However, these estimates do not take into account Social Security COLAs.

After including annual cost-of-living adjustments, payments would increase from $2,250 for a 62-year-old to $3,205 for a 66-year-old and $5,091 for a 70-year-old, according to Mahaney’s calculations.

Waiting until age 62 to 70 to start collecting Social Security retirement benefits increases total benefits by about 76 percent and annual cost-of-living adjustments by about 76 percent, Mahaney wrote in the study.

In other words, retirees can benefit more by delaying their annual COLA.

Mahaney’s analysis is based on a comparison of two hypothetical Social Security recipients. One person will make a claim in 2016 at age 62, and the other will make a claim in 2024 at age 70. For both, the primary insurance amount, or benefit at full retirement age, is $3,000 per month. The analysis uses historical COLA from 2017 to 2026 and assumes future COLA is flat at 2.5%.

For each retiree, the decision of when to claim not only affects the size of their benefits, but also the increase in their Social Security COLA, according to Mahaney’s research.

For example, under the scenario in Mahaney’s study, if the COLA were to reach 8.7% in 2023 (the highest in 40 years), one retiree who files at age 62 would receive an increase of $225 per month, while another retiree filing at age 70 would receive an increase of $395 per month. The $170 difference in monthly benefits totals $2,040 over the course of a year.

In his study, Mahaney writes that the profit gap will not go away. Rather, he writes, it becomes part of the base from which all subsequent COLAs are synthesized.

“The inclusion of cost-of-living protection is one of the core things that makes Social Security unique,” says Joe Elsasser, a certified financial planner based in Omaha, Nebraska, and president of Covisum, a Social Security claims software company.

“It’s important to think about it at the forefront of social security decisions,” Elsasser said.

When it comes to claiming severance benefits, Elsasser says he often tells his clients, “Don’t act out of fear. Lead by example.”

Elsasser said it makes sense for the higher-income spouse to delay claiming Social Security if the couple has enough money to cover living expenses and is in good health during the intervening years.

By waiting to claim Social Security, married high-income earners increase their retirement benefits and the survivor benefits they receive if their spouse dies.

When deciding how long to defer, Mahaney said he advises clients to defer by year.

“At age 62, deferring until age 70 is not an irreversible decision,” Mahaney said. “Maybe you look at it every year and say, ‘Well, that’s a higher cost-of-living adjustment. If you delay Social Security, you’ll get an even bigger benefit in nominal dollars.'”