The most common answer I hear from other advisers is that you should wait until age 70. That’s not always the case.
There’s so much advice flying around about when to claim Social Security benefits that it can be confusing. Sometimes, it makes sense to claim earlier than age 70. Sometimes it does not, says The Beachcomber News of Brigantine in the article “When to claim Social Security.”
How’s your health? The longer you expect to live, the longer you should wait to claim benefits. The break-evens for age 62 vs. 66 are ages 78 and 79. The break events for 66 vs. 70 are ages 82 and 83. It’s not to say that you must wait if you think you are going to live for a long time, because there are other factors that should be considered.
How much money do you have saved for retirement? The more money you have been able to save over the course of your career, the longer you can potentially delay taking Social Security. Every year that you don’t collect benefits, your monthly benefit grows by 8%. That’s a terrific increase, and one you won’t get in many other places. Don’t overlook this advantage. However, if you haven’t saved a lot, you may not have a choice and have to take your benefits earlier.
What about your spouse’s benefits? What your spouse can expect to receive in benefits may have an impact on your decision about when to take your own benefits. This includes ex-spouses, by the way, if you were married for more than 10 years and have not remarried.
Your lifestyle now and your lifestyle in the future. Think about what’s more important to you and your spouse: getting a higher total monthly benefit by waiting to claim Social Security at age 70, or getting a smaller benefit now? Again, if you need the income and can’t wait, that’s your answer. However, if you expect to live a long, active life, you may want to wait. What is your plan for your retirement’s early and later stages? There are stages to retirement and retirement spending. In the early stage, people to tend to have a more active and costly lifestyle. As aging progresses, most people spend less.
What will your spouse need in the future? What if your spouse outlives you? This is especially important, if one of you has been the high-income earner. When one of you dies, the survivor will get the higher of yours or their Social Security benefits, not both. If you want to maximize the surviving spouse’s benefit, then you may want to consider waiting, so that they will receive a larger benefit for the rest of their life.
These are issues that can be discussed with your estate planning attorney when you are working through your estate plan. How will your Social Security benefits work with your retirement income plan, and how will distribute your assets for the benefit of your spouse and children?
Reference: The Beachcomber News of Brigantine (May 29, 2019) “When to claim Social Security.”