Social Security may be one of your largest assets. What and when you collect will make a huge difference to your lifetime benefits.
Today’s Social Security question is about filing options for people who never married.
Question: I’m single, with no family, and I just turned 62. I am hoping I can find work and that I’m able to work until age 70. According to my estimated benefits, at age 70 I will receive $1,730 a month. I have lived in California most of my life and would prefer to stay, but it does not seem realistic to live on that amount of money. Any advice for increasing benefits? What about the start, stop, start strategy?
Answer: You can start your benefit now, but it will be reduced relative to your age-66 full retirement benefit by 25 percent. When you reach age 66 and not a day before, you can suspend your retirement benefit and start it up again at, say, 70. It will be increased from its 25-percent-reduced level by 32 percent (after inflation) when you restart it at 70. Therefore, if your full retirement benefit in today’s dollars is $1,000 per month, your benefit through age 66 will be, again in today’s dollars, $750 per month. Between 66 and 70, it will be zero, and after age 70, it will be $750 per month times 1.32 — or $990 per month.
If you don’t take your retirement benefit early and wait until 70 to collect it, your benefit starting at 70 will be $1,320 per month.
Based on your estimated age-70 benefit amount of $1730, your full retirement benefit appears to be $1,311 per month, or 32 percent lower. And your age-62 benefit appears to be $983 per month, or 25 percent lower than your age-66 benefit. That’s miles lower than the $1,730 per month you can collect at age 70. There is, therefore, a very big incentive to wait until 70 to collect if at all possible.
To quote Bob Dylan, “Tomorrow is a long time.”
If you live to 100, which is increasingly likely for middle class Americans in decent health, you’ll be extremely happy you waited until age 70 to collect.
Note that if you take your retirement benefit early and suspend it at full retirement age or, indeed, if you take it at full retirement age, but immediately suspend it, you’ll have the option to take suspended benefits in a lump sum, but your retirement benefit thereafter will continue at the level it was at the time of suspension.
I’m assuming, as you suggested, that you were never married or were married for less than 10 years so you can’t collect benefits on an ex-spouse. If you could, the optimal strategy could be very different depending on your ex’s age, if he’s alive, whether and when he died, whether he collected his own retirement benefit early, and how much he earned.
My best advice is to look hard for a job, file and suspend at 66, keep working until 70, and restart your retirement benefit at 70 at its highest possible value.
My weekly Social Security column appears on PBS NEWSHOUR’s website.
