How do I know what is the right time for me and my husband to take social security retirement benefits?

Answers

  • 6 out of 9 people found this answer helpful

    CFP®, MBA Sonoma, CA

    Generally, the highest lifetime return to be had from Social Security benefits is to wait until you are age 70 to begin taking distributions. This is due to the 8% automatic annual increase in benefit payments when the start is delayed to that age, and the fact that most of us will live past their early 80s when the amount received from taking benefits later outstrips that of taking them at the typical retirement age.

    If you decide however to start SS benefits before age 70 for whatever reason, an individual should never take them before full retirement age ("FRA," currently age 66) unless in serious financial need, or in cases where a normal life expectancy is not anticipated.

    For married couples, the higher earner should wait to age 70 to begin taking benefits. This is because they will earn that higher benefit both for their lifetime and for that of their surviving spouse. There is no further advantage to be had by waiting until after age 70 to start taking benefits.

    An advantageous approach for spouses is for the younger of the couple to take spousal benefits at FRA. To make this possible, the older spouse will have to be over FRA him or herself and be receiving benefits already, or if not yet age 70, to "file and suspend" for their own benefit.  This arrangement allows one member of a married couple to take spousal benefits at FRA while allowing both of their primary benefits to continue to increase until age 70.

    These are the general guidelines I use in my practice, though the reality is that the rules are complex and each situation needs to be evaluated individually. These guidelines do not necessarily apply to survivor benefits for spouses or children, benefits for divorced spouses or disability, all of which are beyond the scope of this outline. Also, note that you will need to enroll in Medicare at age 65, regardless of whether you start taking SS benefits.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 374 views
  • 3 out of 4 people found this answer helpful

    CFA, CPA San Francisco, CA

    If you can afford to wait, generally the economic value of your benefit will be higher given current interest rates and the fact that life expectancy is increasing. 

    For most people retiring at standard age, for each year you delay taking your benefit, SSA will increase it by 8% per annum until you hit age 70.  This higher benefit is paid for the rest of your life (and as a reduced survivor benefit), whether you live 15 years or 25 years longer.  

    Of course you need to check your particular facts and circumstances, and you might wish to consult with an advisor to understand all of your options.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 267 views
  • 0 out of 0 people found this answer helpful

    CDFA Mystic, CT

    Unfortunately, there are a tremendous number of variables when it comes to filing for Social Security benefits. Without knowing your personal specifics, I can't really give you a good answer.

    However, there are a couple of initial thoughts to start with:

    First, if you absolutely NEED the income now, then there is not much of a discussion. You would opt to receive benefits as soon as eligible in your case (generally 62, but not sure of your ages).

    Second, begin to educate yourself on the rules and nuances of the Social Security system. Although the SSA website has some great resources, it is not going to guide you to the right answer, but that is a good place to start to educate yourself on the basics.

    There are a ton of good resources on the internet to help you evaluate many of the various filing options when married/divorced/widowed. One resource that I like very much, that is produced by a fellow investment advisor is "Getting Your Financial Ducks in a Row". Jim Blankenship is an expert on Social Security filing strategies, so I would suggest going to his blog and looking through the various topics. Go to the right hand column, scroll down to "Categories", and click on "Social Security". That will bring up all posts on Social Security.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 280 views
  • 0 out of 0 people found this answer helpful

    CFP® Santa Barbara, CA

    The best approach is to first identify your expected spending needs at retirement to see, based on all sources of income, how much you will need from Social Security.  You can create several scenarios, based on different retirement ages, to see what impact these different scenarios will have on your retirement income.  By comparing the scenarios, and making reasonable assumptions about your retirement needs, you can then decide when to take your Social Security benefits.  I recommend including this scenario analysis as part of a comprehensive financial plan so you can fully explore all options.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 242 views
  • 0 out of 0 people found this answer helpful

    CFP® Palo Alto, CA

    Read Martin Weil's answer below - it's a great summary.

    Note that especially for married couples (particularly where they both had earnings) it may be quite complex to find the most optimal strategy.  Consider running your numbers through something like <https://www.socialsecuritytiming.com> or consulting with an advisor who has access to similar professional software.

    In general, the longer you wait, the more you'll get (if you live long enough to benefit from the higher payments).  Waiting, however, may mean spending down other resources, which may not be an option.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 251 views
  • 0 out of 0 people found this answer helpful

    CFP®, CPA Stow, OH

    As previously stated, the current "effective rate" of deferring taking social security from initial to age 70 is 8% per year.

    It is difficult to find a "guaranteed" investment that has those returns.  There are many "gotcha's" and spousal provisions in the social security code, which add to the impact of making a wrong choice.  As an advisor who specializes in this area (few do, since there is no commission or residual income involved in SS planning) I have written an ebook which is available on Amazon

    When To Apply for Social Security-Strategies for Maximizing the Guaranteed Income You Can't Outlive

    Also,  the social security election decision should be made in a vacuum, as there are many other considerations- availability of other assets, tax planning, etc.  I recommend that you seek the advice of a CPA or independent CFP who will work with you on an hourly fee basis and guide your through your options from a tax and lifestyle perspective.

    Feel free to contact me for additional information.  I have licensed software which allows me to determine the optimal election for clients.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 242 views
  • 0 out of 1 people found this answer helpful

    CFP®, ChFC, EA Redwood Shores, CA

    If you need the money to meet your living expenses, the answer is “as soon as you’re eligible” .

    If you can afford to wait, the amount of your future benefit increases between 4.5% and 8% for each year you delay until age 70. Compare this to simply putting this money in a bank.

    You can use this handy calculator to determine specific number.  In addition there are a number of strategies, which allow you maximize your benefit, but which of the strategies to use depends in large on your individual circumstance.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 274 views
  • 0 out of 1 people found this answer helpful

    ChFC Mill Valley, CA

    I think Martin Weil gave a very good summary of this discussion. The bottom line is you want to maximize your benefit based on ALL the options available. Especially if you are married, sit down with a planner who understands Social Security or spend a LOT of time at ssa.gov. Most folks take their benefit too early and not strategically and leave tens of thousands on the table. You can get $50,60,000 or more each year in guaranteed income with a cost of living adjustment if you are strategic and make the  rules work for you.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 241 views
  • 0 out of 1 people found this answer helpful

    CFP®, MBA, MSFS Irvine, CA

    Once you are eligible for SS, the benefit will increase about 8% per year until you are 71. So if you have the ability and can afford to push off taking SS, the more you will receive.

    The compensating issue is longevity. It is a math question. Suppose your SS is $2500 per month this year and $2650 next year.

    If you wait one year - you don't receive $30,000 ($2500 times 12 months). In exchange you will receive $1800 more for x years. ($150 extra per month times 12 months). It will take nearly 17 years to breakeven on that decision. So do the math.

    Unless you can reasonably expect to live 20+ years past your start date, it probably is better to take it sooner than later - but this is entirely a personal decision.

    Hope this helps.

    Was this a helpful answer?

    Advisors offer free consultations to determine if you're a good fit for one another. Providing more information in the consultation request will help advisors have a better sense of what you're looking for. The advisor will contact you via email and set up a time to meet. Depending on the advisor, and your preferences, this could be an in-person or online meeting. You are under no obligation to engage them after meeting with them.
    • Embed ›
    • 344 views

Have a question?

Get answers from our expert nerds.


chat

mail
×

Add Video

Upload

Add Video

100%

Please wait while your file is being uploaded.

Add Video

How to Save for a Mortgage

Video Uploaded

Add Another I'm Done

Preview Video

×

*Disclaimer: We try to keep information accurate and up to date, however we cannot make warranties regarding the accuracy of our information. Please verify FDIC Insurance / NCUA Insurance status, credit card information, and interest rates during the application process. Please note that NerdWallet has financial relationships with some of the merchants mentioned here. NerdWallet may be compensated if consumers choose to utilize the links located throughout the content on this site and generate sales for the said merchant.

*Advertiser Disclosure: Many of the credit card offers that appear on this site are from companies from which NerdWallet receives compensation. The results of our “card comparison and finder tool”, card assessments, and reviews are based on objective quantitative and qualitative analysis of card attributes. They are not affected by compensation. Compensation may impact which cards we review and write about and how and where products appear on this site (including, for example, the order in which they appear). While we try to feature as many credit cards offers on our site as we can maintain (1,700+ and counting!), we recognize that our site does not feature every card company or card available on the market. Additionally, our star ratings are a mix of user feedback and NerdWallet’s independent evaluation which are independent of compensation. For a list of all of our advertising partners, click here

© Copyright 2014 NerdWallet, Inc. All Rights Reserved. Privacy Policy|Terms of Use
Nerdwallet, Inc. is a BBB Accredited Financial Service in San Francisco, CA