The easy answer to this question is ‘as late as possible’ – which is, theoretically, age 70. These benefits will likely be your only source of inflation-adjusted, government-backed income-for-life and your best defense against ‘outliving your assets’. It is to your benefit (no pun intended) to wait as long as possible, allowing additional contributions and delayed credits to run up your benefit to the highest amount possible.
Who should use the easy answer?
- A single person who has never been married as long as that person is not expected to die prematurely
- The only income earner for a married couple as long as that person is not expected to die prematurely
- The highest income earner for a married couple as long as that person is not expected to die prematurely
Those who have a choice amongst two or more “types” of benefits will generally want to take the ‘largest’ benefit as late as possible. Wait, you say! A choice among “types” of benefits? Who gets more than one choice?
- Anyone currently married (where both spouses qualify for benefits based on their own earnings records) has a choice between taking a ‘spousal benefit’ based on their spouse’s earnings record or a ‘retirement benefit’ based on their own benefit – or one first and then the other.
- Anyone divorced who was married at least ten years and has not remarried (where both ex-spouses qualify for benefits based on their own earnings) has a choice of his/her own retirement benefit, a spousal benefit – or one first and then the other.
- Anyone widowed after at least one year of marriage (with some exceptions) and not remarried before the age of 60 where both the deceased and the survivor qualify for benefits based on their own earnings records has a choice between a survivor benefit, his/her own retirement benefit, or multiple combinations of the two depending on age and situation.
- A widow remarried after the age of 60 will likely have the added choice of taking a spousal benefit based on the new spouse’s earnings record besides the usual survivor benefit and his/her own retirement benefit – or a combination of two or more of these.
- Of course, anyone widowed or divorced multiple times may have many earnings records to choose from. I do not suggest proactively collecting ex- or deceased spouses for the purpose of increasing your options.
Certain tricks apply across the board, such as not being able to claim a ‘spousal benefit’ without automatically triggering a claim for your ‘own retirement benefit’ before your Full Retirement Age – or the fact that spousal benefits due not accrue delayed credits after Full Retirement Age while your own retirement benefit (or the benefit for your survivor) does.
Although this overview is an oversimplifcation, it should serve to give you the general idea behind what is now being called ‘Social Security Claiming Strategies’. The representatives at your local Social Security Administration office may or may not tell you about all of your options so be sure to talk to your financial planner. Customized projections can clarify the numbers – and help you to optimize these important benefits. A financial planner can also take into account your other retirement income sources and help you find the most tax-efficient way to use them together.
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