General Guidelines for Starting Social Security Benefits

Just as its name suggests, Social Security was originally created to provide security in retirement. It has been an “automatic” benefit. But financial advisors are not compensated for Social Security; therefore, most people nearing retirement are not advised about the material difference that factors such as marital status, age at inception, and other income can make in your overall lifetime Social Security benefit. Your monthly and lifetime benefits can be significantly enhanced my carefully constructing the best strategy for your situation.

Advice on Social Security needs to consider all the household factors. Social Security represents one of the biggest retirement income sources for most Americans, so your benefit options should be well thought out. It is easy to come up with a suboptimal recommendation if you just make the simplest or most convenient Social Security benefit selection without a holistic approach. Taking a holistic approach as we do means that you identify all of the factors that can impact your Social Security benefit and carefully consider the impact of each on your selections. Your personal status—whether you are married and under what conditions—is one such factor as the graphic below illustrates.

“Rules of Thumb” by Personal Status:

Married

Higher earner: begin spousal benefits at Full Retirement Age (FRA) or as soon as eligible thereafter, and switch to own benefits at 70.

This maximizes the monthly benefits that continue for the joint life expectancy of the couple. If one or both partners live a long time then the benefits are maximized when the higher earner delays the start of benefits based on own record until age 70; he or she usually can begin spousal benefits earlier than 70. Lower earner: Less important and best strategy depends on other factors. In general, start benefits as soon as possible (as long as your earnings would not eliminate the benefits).

If you work until FRA or later, consider beginning spousal benefits and at 70 taking higher of spousal benefits and benefits based on own record.

Our experience is that most financial advisors are not properly trained about Social Security options, don’t understand the tax impact related to Social Security, and have misaligned incentives that lead to a lack of expertise to help consumers with Social Security selection. As a result, you may not be getting the best advice available regarding your options. We provide a free, no-obligation Social Security Quickstart Report customized to each situation, along with counseling about optimal Social Security selection, to help retirees make the best decision for their situation.

Single

If you have short life expectancy, begin benefits early or as soon as they would not be lost due to earnings test.

If you have an average or long life expectancy, delay benefits as long as possible, preferably until 70. This will likely maximize the present value of total benefits. In addition, since it provides the largest monthly benefit level at age 70 and beyond, it will minimize the risk of your portfolio running out of money in your lifetime.

Our experience is that most financial advisors are not properly trained about Social Security options, don’t understand the tax impact related to Social Security, and have misaligned incentives that lead to a lack of expertise to help consumers with Social Security selection. As a result, you may not be getting the best advice available regarding your options. We provide a free, no-obligation Social Security Snapshot Report customized to each situation, along with counseling about optimal Social Security selection, to help retirees make the best decision for their situation.

Divorced

In general, if you are divorced but your marriage lasted at least 10 years then you are eligible for benefits based on your ex-spouse’s record if 1) you are 62 or older and 2) not remarried or you remarried after age 60.

In general, if you remarry before age 60 you cannot receive survivors benefits based on the ex-spouse’s record unless this latter marriage ends by death, divorce, or annulment. Potentially, you are entitled to benefits based on your own record, benefits based on ex-spouse’s record, or benefits based on current spouse’s record if you entered that marriage at 60 or later. Ask the Social Security Administration to help you examine your options.

Our experience is that most financial advisors are not properly trained about Social Security options, don’t understand the tax impact related to Social Security, and have misaligned incentives that lead to a lack of expertise to help consumers with Social Security selection. As a result, you may not be getting the best advice available regarding your options. We provide a free, no-obligation Social Security Snapshot Report customized to each situation, along with counseling about optimal Social Security selection, to help retirees make the best decision for their situation.

Widowed

A widow is entitled to the spouse’s full benefits at the widow’s Full Retirement Age (FRA) or reduced benefits as early as age 60.

A disabled widow can receive reduced benefits as early as 50. Since the reduction in benefits from starting benefits before FRA continues for the rest of your life, when economically feasible, the widow below FRA should delay benefits until FRA. Usually, the widow(er) is FRA or older when the spouse dies.

If you are widowed and at least FRA then you are entitled to the higher of benefits based on your own record and deceased spouse’s benefits level at time of death. If the deceased spouse waited until 70 to begin benefits based on own record then you are entitled to this potentially much larger benefit.

For example, most people born between 1943 and 1954 have a Full Retirement Age of 66. By delaying the start of benefits based on own record from 66 until 70, they and their surviving spouse will receive 32% more in inflation adjusted benefits for the rest of their joint lives. If a higher earning husband has a younger wife then, by delaying benefits based on his record until 70, he can ensure the32% higher real monthly benefit until the second dies. For the younger wife, this could be a 32% bonus for a decade or longer.

Our experience is that most financial advisors are not properly trained about Social Security options, don’t understand the tax impact related to Social Security, and have misaligned incentives that lead to a lack of expertise to help consumers with Social Security selection. As a result, you may not be getting the best advice available regarding your options. We provide a free, no-obligation Social Security Snapshot Report customized to each situation, along with counseling about optimal Social Security selection, to help retirees make the best decision for their situation.

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