This smart retirement strategy is gaining popularity

The combination of working longer and waiting to start Social Security benefits is a reasonable way for older workers to address the modern realities of longer lifespans and meager retirement savings.

And more of them are taking this path. The latest evidence comes from Fidelity's Social Security IQ survey, which surveyed workers age 55 to 61 regarding their knowledge about Social Security benefits. The 2017 survey shows that a little more than one in four (28 percent) 61-year-olds plan to start Social Security income at age 62, down dramatically from 2008, when 45 percent said they would claim Social Security benefits then.

Age 62 is the earliest possible age at which to start Social Security's retirement benefits, but it results in the lowest monthly check.

Fidelity's survey reveals a few important reasons for this shift. In its 2008 survey, 53 percent of respondents reported themselves as unemployed. So for many, starting Social Security benefits was an attractive way to help make ends meet. In the most recent survey, that figure dropped to 41 percent.

In addition, the percentage of survey respondents who said delaying Social Security benefits gave them a better return than claiming as soon as possible doubled between 2008 and the latest survey, from 10 percent to 21 percent. This is a correct conclusion for the vast majority of older American workers.

Many studies demonstrate the significant improvement in your retirement security by delaying the start of Social Security benefits, with the potential to boost your lifetime payout by $100,000 and, if you're married, the potential to increase the survivor's benefit to your spouse. If you'd like to see for yourself the possible rewards for delaying your benefits, Fidelity offers a Social Security calculator that estimates the increase in your lifetime payout if you delay.

The reason for the boost is that Social Security uses outdated factors to reduce your benefits if you start collecting before your full retirement age and to increase your benefits if you delay. These factors were developed decades ago, when interest rates were much higher and people weren't living as long as they do today.

As a result, Social Security's reductions penalize you if you start benefits before your full retirement age, and reward you if you delay until after your full retirement age. Social Security's full retirement age is currently 66, increasing to 67 for workers born in 1960 or later.

According to Fidelity's report, the average age most people plan to begin collecting Social Security benefits is 67, with 7 percent saying they'll "take it to the max" by waiting until 70.

In addition to an increase in the number of people delaying the start of Social Security benefits, the percentage of people 65 and older who still work has also been climbing. According to a report from the Pew Research Center, it hit 18.8 percent in 2016, up from 12.8 percent in 2000.

Working longer and delaying Social Security benefits and retirement both have a powerful positive influence on your retirement security. One example shows that a married couple who delay retiring from age 65 to age 70 can increase their retirement income by 41 percent. And a recent study from the Stanford Center on Longevity shows similar increases, ranging from 25 percent to 34 percent or more.

The results from Fidelity and Pew  might be explained by more older workers getting the message about the advantages of delaying their retirement. This would be good news because it will help them enjoy a long and financially secure retirement.


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    Steve Vernon helped large employers design and manage their retirement programs for more than 35 years as a consulting actuary. Now he's a research scholar for the Stanford Center on Longevity, where he helps collect, direct and disseminate research that will improve the financial security of seniors. He's also president of Rest-of-Life Communications, delivers retirement planning workshops and authored Money for Life: Turn Your IRA and 401(k) Into a Lifetime Retirement Paycheck and Recession-Proof Your Retirement Years.