No simple answer to some questions

I'm almost 59 and hope to retire from working soon. Should I take Social Security as soon as possible, or wait for the maximum amount? Signed: Planning Ahead

Dear Planning Ahead:

I’m afraid there’s no simple answer to your question, except “it depends.” It depends on your health; it depends on your need for the money when you retire; and it depends on your life expectancy. Plus, your marital status may also influence your decision on when to claim.

First of all, you cannot claim your Social Security retirement benefit until you are at least 62 years old. But if you claim at 62 your benefit will be cut by 30% from what it would be if you waited until your full retirement age (67). You actually have an 8-year window starting at age 62 and lasting until age 70 to claim your Social Security benefit. The earlier in that window you claim, the smaller your benefit will be. And the longer you wait to claim (up to age 70), the higher your benefit will be.

At age 70, your benefit will reach maximum at 24% more than it would be at age 67, and 76% more than it will be at age 62. Essentially, if you are in good health, don’t urgently need the money earlier, and expect to enjoy at least “average” longevity (about 85 for a man your age today), you will not only get a much higher monthly benefit, but also collect much more in cumulative lifetime benefits by waiting until age 70 (or as long as you can) to claim. Of course, no one knows how long they will live, but there are online tools which can assist you with esti-

See GLOOR, page A10

Russell Gloor Social Security Matters GLOOR

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mating your life expectancy. One relatively simple and user friendly tool is available rom Social Security at this link: https://www.ssa.gov/oact/p opulation/longevity.html.

Conversely, if you are not in good health and don’t expect at least average longevity, or if you urgently need the money when you retire from working, claiming earlier may also be a prudent choice. If you are married and you predecease your wife, her survivor benefit will be based upon the benefit amount you are actually receiving, so by waiting to get a higher benefit for yourself you are also enhancing your wife’s eventual benefit as your widow, should you pass before her.

Be aware too that, should you decide to go back to work, until you reach age 67 you’ll be subject to Social Security’s “earnings test” which limits how much you can earn before Social Security takes back some of your benefits (the 2021 limit is $18,960 and if that were exceeded, they’d take back benefits equal to half of the amount it was exceeded by). The earnings limit changes annually but goes away at your full retirement age.

So, these are the things you should consider in deciding when in that 8-year window to claim your benefits.

I cannot directly answer your question for you, but I hope the above gives you what’s needed to make an informed decision on when to claim your Social Security benefits.

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I’m 66 now and will be 67 in December and my question is this: Should I take Social Security now or wait? I’m still working full time and plan to work for a few more years, at least until I’m 70 but maybe longer. I was told by a friend that I should take my Social Security now and put the money into savings, invest it or use it. And, since I’m still working, I’m still contributing to Social Security, so that when I reach 70 I should get the full amount.

I’m not sure if this is accurate so would like to hear your advice. Signed: Uncertain Lady

Dear Uncertain Lady: By taking your Social Security benefit now you will be locking into a benefit amount that is smaller than it would otherwise be if you wait longer to claim.

You’ve already reached your Social Security full retirement age (FRA) of 66 and, since then, have been earning delayed retirement credits (DRCs) at the rate of .667% per month of delay past your FRA. You will continue to earn those DRCs – an 8% higher benefit for each year you delay – until age 70 when your benefit will be 32% more than it would have been at 66 and 24% more than at age 67. Can you do better than that by taking a smaller benefit now and investing it? That depends upon what type of investing you intend to do. I cannot answer that for you, but a guaranteed 8% increase in your benefit amount for each year you delay, resulting in a much higher benefit for the rest of your life, is pretty hard to beat.

It is true that continuing to work now may help increase your Social Security benefit, but that’s true regardless of when you claim. Your benefit will be based upon the 35 highest earning years over your lifetime (adjusted for inflation) at the time you claim.

If, after your benefits start, your current earnings are higher than any of those used to originally compute your benefit, you will get credit for those higher earnings and your benefit will increase. Even after you claim benefits, Social Security examines your new earnings every year to see if you’re entitled to a higher benefit. And you will get credit for your current earnings even if you wait and continue to earn those DRCs for a much higher benefit later.

In the end, when to claim Social Security is a decision that should consider your current and future financial needs, and your health and estimated longevity. If you are working and don’t need the extra money right now, and like the idea of a higher benefit later, after you are done working, then waiting to claim makes sense, especially if you’re in good health and expect at least average longevity. Average life expectancy today for a woman your age is about 87, and if you attain at least the average, you’ll collect much more in cumulative lifetime benefits by waiting longer to claim.

Conversely, if your longevity outlook is less than average and you need the money now, claiming earlier is a perfectly good strategy.

One last thing to consider: if you are married and your husband is collecting benefits, you are eligible to file a “restricted application for spousal benefits only” which would let you collect a spouse benefit equal to half of your husband’s FRA benefit amount, while allowing your own benefit to continue to grow until age 70. You can do this because you were born in 1953, before the cutoff date of January 2, 1954. The option was eliminated for anyone born after that date.

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