These Simple Changes Might Save You Thousands in Social Security Benefits

These Simple Changes Might Save You Thousands in Social Security Benefits
Photo by fizkes /

Welcome to the Social Security Q&A. You ask a Social Security question, our expert provides the answer.

You can learn how to ask a question of your own below. And if you would like a personalized report detailing your optimal Social Security claiming strategy, click here. Check it out: It could result in receiving thousands of dollars more in benefits over your lifetime!

This week, we have something a little different: A look at how the government’s poor choice of words could cost you a ton of Social Security income.

Unhelpful — and costly — language

The decision about when to claim Social Security retirement benefits is important. Unfortunately, it can also be very confusing.

An individual can claim benefits between the ages of 62 and 70, and a spouse can claim spousal benefits between age 62 and what the Social Security Administration calls full retirement age (FRA). Part of the difficulty in determining the best age to claim is that it depends on individual circumstances.

What is not particularly helpful is the way that the SSA currently describes the options in your Social Security statement.

The statement shows what your benefits will be at three ages: age 62, FRA and age 70. (You can get your statement by signing up for my Social Security. Everyone should open an account so you can see the benefits you have earned.)

Many people take their benefits at the first opportunity, age 62. Very few wait until age 70. A recent report from the Bipartisan Policy Center recommends relabeling these options on the Social Security statement to help people better understand how their choices will affect their retirement future.

First, the BPC recommends changing the label “at 62” to “reduced benefit age.” This emphasizes the fact that benefits increase every year someone delays claiming, and that someone who claims at 62 will be giving up higher Social Security benefits for the rest of their life.

Second, the BPC recommends calling benefits at age 70 the “maximum benefits age.” People who delay claiming beyond age 70 will get no additional increase in benefits. So, it makes no sense to wait to claim beyond 70.

A huge difference

The difference between claiming at 62 and 70 is huge. For people born after 1959, monthly benefits at age 70 are 77% higher than benefits claimed at 62. For people born before 1960, the difference is similar.

The BPC also recommends changing the phrase “full retirement age” to “normal claiming age.” The rationale for this change is to recognize that the decision to retire and the decision to claim Social Security benefits are two separate decisions.

In many circumstances, someone who retires will need Social Security benefits to replace the loss of income when he or she leaves their job. But if the two can be separated, there is a real advantage in choosing to claim Social Security at an age when you can maximize your long-term Social Security benefits.

Many people are puzzled by the earnings test, which can reduce the benefits you receive if you are below “normal claiming age” and continue working. Here, the BPC proposal is to change the name from “retirement earnings test” to “benefit-deferral feature.”

This name change describes more accurately what is happening. If you lose benefits while you continue working, your benefits will be higher after you reach “normal claiming age.” Thus, you do not necessarily lose any benefits by continuing to work — they are just deferred to a later time.

These are interesting suggestions which I believe can help you think more clearly about your claiming decision.

Got a question you’d like answered?

You can ask a question simply by hitting “reply” to our email newsletter, just as you would with any email in your inbox. If you’re not subscribed, fix that right now by clicking here. It’s free, only takes a few seconds, and will get you valuable information every day!

The questions I’m likeliest to answer are those that will interest other readers. So, it’s better not to ask for super-specific advice that applies only to you.

About me

I hold a doctorate in economics from the University of Pennsylvania and taught economics at the University of Delaware for many years. Presently I am teaching at Gallaudet University.

In 2009, I co-founded, an internet company that provides advice on Social Security claiming decisions. You can learn more about that by clicking here.

Got any words of wisdom you can offer on today’s question? Share your knowledge and experiences on our Facebook page. And if you find this information useful, please share it!

Disclaimer: We strive to provide accurate information with regard to the subject matter covered. It is offered with the understanding that we are not offering legal, accounting, investment or other professional advice or services, and that the SSA alone makes all final determinations on your eligibility for benefits and the benefit amounts. Our advice on claiming strategies does not comprise a comprehensive financial plan. You should consult with your financial adviser regarding your individual situation.

Retire on your own terms with help from this course

The Only Retirement Guide You'll Ever Need gives you the knowledge you need to retire on your own terms. Sure, you can pay a financial adviser, but this online course gives you total control to create a customized retirement plan around the things that matter to you -- without the fees you can expect from financial firms and advisers.

You'll get expert, personalized advice. You'll have access to the latest tools. You'll have ongoing support. And when you've completed the course, you'll be ready to approach your retirement with confidence and with peace of mind.

It's time to plan the best years of your life. Let's get started.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next

7 Ways Coupons Waste Your Money and Time
7 Ways Coupons Waste Your Money and Time

Here’s why I hung up my scissors and quit clipping coupons.

5 Memberships That Offer Car Insurance Discounts
5 Memberships That Offer Car Insurance Discounts

These discounts may save you hundreds — even thousands — of dollars a year.

10 Ways Anyone Can Earn More Income
10 Ways Anyone Can Earn More Income

Looking for additional cash? Here are a bunch of options that are accessible to anyone with internet access.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started


Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.