Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security.
I've been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR's website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company's site, www.maximizemysocialsecurity.com, and click More Press below the WSJ quote.
Today's question is about whether it is ever beneficial to wait till after 70 to take benefits. It also suggests potential maximizing strategies but warns against a potential pitfall.
Question: I am 66 and planning to work until 72 when my wife will reach 66. Will I have larger benefits if I wait until 72 to start to take them?
Answer: Do not wait beyond age 70 to collect your retirement benefit. There is no increase in your retirement benefit for waiting beyond age 70. None at all. So if you wait until age 72, you will simply give up two years of retirement benefits for nothing. These are benefits you earned.
You should, of course, wait until 70 if you can afford to, since your benefit will be 32 percent higher than if you were to take benefits now, at age 66. When your wife reaches age 66, she can apply just for your spousal benefit and wait until age 70 to collect her largest possible retirement benefit. If she reaches age 66 before you reach age 70, you can file for your retirement benefit and suspend its collection until age 70. This filing and suspending will permit your wife to collect her spousal benefit.
If you file and suspend before your wife reaches full retirement age (66) and she applies for a spousal benefit, she will be forced to take a reduced retirement benefit and her spousal benefit won’t equal half of your full retirement benefit. Instead, her spousal benefit will be calculated as an excess spousal benefit equal to her full spousal benefit less her own full retirement benefit (her retirement benefit were she to wait until 66 to collect it). If this excess benefit is negative, it will be set to zero. So be careful what you do here!!
