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Claiming Social Security

One Size Doesn’t Fit All When it Comes to Social Security Benefits
by Will Rahjes

Will Rahjes, Financial AdvisorOne of the most complicated and consequential decisions you make when contemplating retirement is when to start collecting social security.  You might think it’s simple…the longer you wait the better, right?  Not always. There are many tools, such as online calculators to help you figure this out, but often these calculators don’t consider the nuances of your personal situation.  Below is an example of a real life scenario:

SCENARIO*:  A husband and wife plan to retire at age 62.  Each will get $36,000 a year from Social Security if they wait until their full retirement ages of 67 to start benefits.  But they plan to start benefits now and so will each receive $25,350 a year, or a total of $50,700.

What the calculator recommends:  One spouse should file for benefits at age 65 and five months and get $32,200 a year.  The other should wait until 70 to file and receive $44,640.  Together, the couple will collect $76,840 a year at age 70, about 52% more than they would by both claiming at age 62.  When one of them dies, the survivor will receive the higher of the two checks, or $44,460, for the rest of his or her life.  By contrast, if they both retire at 62, the survivor will receive only $29700.  The calculator estimates the couple will receive 12.5% more value by following its recommendation than by both retiring at age 62.
What the couple does:  The couple decides that one of them should hold off collecting benefits until 70 to maximize the survivor benefit.  They plan to travel and visit grandkids in their early 60s, and would like at least one check to help cover the costs.  Digging into the calculator we see that they still will achieve 99.6% of the optimal strategy if the other spouse starts collecting immediately.

Circumstances and alternative decisions make a big difference.


That is where our team comes in.  We work with clients navigating social security decisions.  We utilize sophisticated planning software in addition to personal conversations to illustrate different claiming strategies and implement a plan that’s optimized for you.

Here are a few things we consider when making the decision to claim Social Security:

  1. Know your “full retirement age”.  Full Retirement Age is when you’re eligible to receive full Social Security Benefits.  Many people believe this is age 65.  Your full retirement age depends on your birth year.  For example: someone born in 1954 has a Full Retirement Age of 66, but a birth year of 1955 moves the Full Retirement Age to 66 and 2 months.
  2. Know your retirement budget.  This can help you understand how a reduced or increased benefit will affect your ability to meet your needs in retirement. 
  3. If married, consider your spouse’s retirement plans and needs.  Your decision about when to claim social security can significantly impact the benefit your spouse receives after you die. 

Deciding when to flip the switch to social security benefits isn’t an easy decision.  If you are unsure about when to take your Social Security Retirement benefits or are concerned whether you have enough retirement savings, now is a great time to reach out and let us prepare a Social Security retirement benefits checkup for you.

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