15 Tips for Making the Best Social Security Decisions

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Editor's Note: This story originally appeared on NewRetirement.

Signing up to start Social Security is simple. However, finding the right Social Security strategy for you can be complicated but VERY worthwhile.

Here are 15 tips to help you make smart decisions about Social Security. Most apply to almost everyone, but the last two are specifically for married couples.

1. Delay the Start of Benefits for as Long as Possible

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This Social Security strategy is not true for everyone, but it is true for the vast majority of folks.

The longer you wait to start Social Security, the bigger your monthly benefits check (and lifetime payout) will be. As a general rule of thumb:

  • Don’t take Social Security at 62, unless you have a very short life expectancy due to illness.
  • If you think that you’ll die before 80 then start taking it at your full retirement age (ages 65-67).
  • If you think that you’ll live beyond 85, then wait until 70.

2. Understand Claiming Penalties and Credits: Max Out Your Benefits by Delaying Until Age 70

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The longer you wait to start benefits, the higher your monthly check will be. There are penalties for starting before your full retirement age and credits if you wait until after.

Your full retirement age is based on your birthdate. It is 66 for most baby boomers and 67 for everyone born in 1960 or later.

Penalties: Social Security payments are reduced if you start before your full retirement age. If you start benefits at age 62, you will get a 25% smaller monthly benefit check than if you wait until your full retirement age if that is 66 (and 30% smaller if your full retirement age is 67).

Credits: If you wait and start Social Security AFTER your full retirement age, then you will accrue delayed retirement credits that will increase your monthly paychecks by up to 8% for each year of delay — up until age 70. (After age 70, there is no additional incentive to delay starting your payments unless you are earning more money.)

Get more details from the Social Security Administration about delayed retirement credits.

3. Compare What Your Monthly Benefits Will Be at Different Start Ages

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Many people consider it interesting to compare what their monthly check will be at different start ages. You can get this information from the Social Security Administration with their My Social Security account tool. The NewRetirement Retirement Planner can also help you make these estimates.

Comparing the differences in monthly paychecks may be enough to help you choose the right Social Security strategy — the right time to start your benefits.

4. Carefully Consider Your Own Longevity

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The best time to start Social Security can only be determined by knowing how long you are going to live. Instead of just considering your monthly benefit, it is also useful to calculate your lifetime benefits based on the total number of years you will be collecting.

Don’t forget that you will likely be collecting Social Security for a long time. Most people in their 50s and 60s have a relatively high chance of living into their 90s!

While not a crystal ball, consider using a longevity calculator to help determine your longevity.

5. Be Especially Careful With Longevity If You Are Female

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Women live longer than men — about five years longer, on average.

So, women can really get an even bigger lifetime Social Security payout if they delay the start of benefits. The average woman will collect an extra five years of benefits.

6. IMPORTANT: Compare the Lifetime Values of Your Benefits at Different Start Ages

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If you don’t automatically accept the Social Security strategy listed above (about delaying the start of benefits), you should take the time to compare the lifetime value of your Social Security benefits at different start ages.

According to a survey on NewRetirement, people near retirement say that comparing the lifetime values of their total payout at different start ages is the most powerful and convincing way to choose the best Social Security claiming strategy.

You see, when you start Social Security early, you collect benefits for a longer amount of time, but with a lower monthly check. If you delay, you collect for a shorter time period, but at a higher monthly amount. You might be surprised to learn that collecting a higher amount for a shorter time period will usually net you a significantly higher total payment — some households can earn up to $100,000 or more in benefits.

To calculate the lifetime value of your Social Security payments, you need to have a guess about your longevity and know your benefit amount at different start ages. When you have this information, the NewRetirement Retirement Planner can easily show you the lifetime value of your benefits with each different strategy.

7. Reconsider Conventional Advice If You Have Underage Children

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If you have children who are unmarried and under the age of 18, the advice to delay benefits may (or may not) be true for you.

Qualified dependent children can receive up to half of the benefit of a parent who is receiving Social Security. This is a pretty big increase in your monthly check. (Also, if grandchildren become dependents of their grandparents due to the death of their own parents or other reasons, they too can be eligible to receive benefits based upon the earnings record of either of their grandparents.)

If you have underage children, then you will want to consider whether the increased monthly benefit you get because of them outweighs delaying the start of Social Security. You will want to think about how long you will collect for the child and whether the lifetime value of the dependent’s benefits is greater than the amount you gain by delaying your start to full retirement age or later. Also consider survival benefits for your spouse (see below), if you are married.

Learn more about benefits for your family.

8. Know About Work Penalties

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You are absolutely allowed to work while taking Social Security. In fact, there are many benefits to doing so, but also some penalties — depending on your situation.

After Full Retirement Age: There are no penalties for receiving Social Security and working at the same time IF you have reached your full retirement age. After your full retirement age, you can earn as much money as you like without incurring any penalties.

Before Full Retirement Age: If you are collecting Social Security and working at the same time when you are younger than your full retirement age, there will be penalties.

However, according to the Social Security Administration, your benefit will increase at your full retirement age to account for benefits withheld due to earlier earnings. So, even if you are working and incurring “penalties,” you can kind of think of the penalties as another way to save for your future.

9. You Don’t Need to Stop Working and Start Benefits at the Same Time

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Retirement — stopping work — is NOT the same as starting Social Security.

You do not need to do those two things at the same time.

10. Explore the Many Ways to Cover Costs After You Stop Work and Before You Start Social Security

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According to the NewRetirement Social Security survey, retirees would be more willing to delay the start of Social Security benefits if they knew how to retire early without that paycheck.

The problem is that respondents were not sure how to make ends meet while waiting to start benefits. Most people were worried about their yearly or monthly budgets.

However, in retirement, what REALLY matters is your LIFETIME budget, not how much you spend or earn on a monthly basis. So, just as you will do well to calculate your lifetime Social Security payments and strive to maximize that benefit, you also can think about your savings, work earnings, home equity and spending as lifelong values.

A few ways you can bridge your way to a delayed Social Security start date are:

  • Withdrawing from savings. (Though, you will want to consider potential lost interest or returns on the money you withdraw.)
  • Reducing expenses. The less you spend, the less income you need. Downsizing or securing a reverse mortgage are popular ways to reduce expenses.
  • Retiring, but working part time.

It is important to try as many different scenarios as make sense to you and compare the impact on your finances in the short and long term.

11. Know How Your Benefit Is Calculated and Boost Your Check

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Your Social Security benefit is based on your highest-earning 35 years of work.

So, the longer you earn a higher salary, the higher your benefit will be.

You may want to consider your retirement date carefully and make sure that you:

  • Have worked at least 35 years. (If you have worked a shorter period of time, then those years are counted as $0 earnings, reducing your payout significantly).
  • Consider how much you have earned in each of those 35 years. Delaying your retirement date for another year (or even a few extra months) of high-earning work might boost you into a higher benefit amount. The maximum amount of taxable earnings changes almost every year. In 2021, the amount is $142,800. (See the full Maximum Taxable Earnings table.)

12. Choose the Right Benefit: Spousal Benefits and Beyond

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You don’t necessarily need to file for your own benefit. If you are married or divorced and even if you have never worked under Social Security, you may be eligible to collect based on your spouse’s or ex-spouse’s earnings.

In fact, you get to choose to file for benefits based on your own earnings, your spouse’s earnings or an ex-spouse’s earnings (assuming you were married for 10 years or longer and are currently unmarried). You will want to choose whichever benefit is highest for you.

If filing as a spouse or ex-spouse, you are eligible to receive an amount of up to 50% of their full retirement benefit amount. However, if you file between age 62 and your full retirement age, then your benefit amount is reduced by a percentage based on the number of months up to your full retirement age.

You will want to compare your benefit amounts for these various options.

13. Be Wary of “Advice” from the Social Security Administration

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The Social Security Administration is not trying to scam you, and it will give you accurate information.

However, you need to know enough about your own situation and what is possible in order to ask the right questions and get really useful answers.

Don’t trust their advice, but do ask a lot of questions.

14. IMPORTANT Social Security Strategy: Delay the Higher Earning Spouse’s Benefits as Long as Possible

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If you are married, this is the best thing you can do to maximize your payout:

Make sure the higher earning spouse waits until at least their full retirement age to start benefits. You don’t need to focus on who is older. Or, who retires first. The key is to make sure the highest earner grabs the highest possible payout.

Why? The reasoning lies in understanding survivor benefits.

While delaying benefits is a good Social Security strategy for anyone — you just get more money every month the longer you wait to start getting payments, it is especially useful for married couples because of survivor benefits.

You see, if one of you dies before the other, then the surviving spouse will get to make a choice about which Social Security benefit to continue receiving. (A surviving spouse is entitled to just one benefit — not both.)

  • If the higher earner lives longer, he or she gets to keep collecting his or her own high payout.
  • If the lower earner lives longer, he or she will be entitled to switch from their own benefit and start claiming the deceased’s maximum benefit.

So, having the highest-earning spouse wait to maximize their benefit ensures the biggest lifetime payout for your household — not just you.

15. Do Everything You Can to Convince the Highest Earner to Maximize Their Benefit

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Not convinced by the logic above? You are not alone. Most households fail to get this right.

The NewRetirement spousal benefit survey tried to figure out what convinces people to delay benefits in order to assist spouses. The following tactics were considered effective:

Comparing Lifetime Values: You might try comparing your total lifetime Social Security benefit as a household using different claiming strategies.

Review Your Spouse’s Income After Your Possible Death: Many people told us that they found it motivating to review what might happen to their spouse’s income after their death. The cut in resources can be pretty dramatic.

Other Helpful Tactics: Besides the above, other tactics that people found useful for convincing themselves to maximize their benefit for the long-term benefit of the household included:

  • Imagining themselves and their spouse as being quite old — research indicates that you are more likely to care for your future self if you can imagine that self as a real person.
  • Feeling confident about making ends meet without Social Security benefits (see above).
  • Talking with their spouse about what different start ages mean for both spouses.

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