Social Security Timing
couples in particular have several options available to increase their
total lifetime family benefits.
However, traditional financial planning won't get you there, for a variety of reasons:
- The tools that purport to help people make the best election decision don't consider all the options.
- Social Security includes spousal and survivor provisions that only apply to married (and sometimes divorced) couples; these provisions can significantly affect your lifetime benefit amounts.
- Married couples need a specialized analysis that incorporates spousal and survivor benefits to help maximize family Social Security benefits.
When to elect Social Security may be the most important decision of your retirement.
How much you receive from Social Security depends on three primary factors:
Since you can't go back and change your earnings record, and you have minimal control over how long you live, calculating an expected lifetime benefit largely hinges on when you elect. In theory, if you elect early, you will get a smaller benefit for a longer period of time. If you elect later, you will get a larger, benefit for a shorter period of time. Single people can do a simple "break-even" analysis to determine whether to take early or wait. But for married couples, the decision is much more complex.
For married couples, a simple break-even analysis will usually give the wrong answer—costing you benefit dollars.
Why? Because Social Security offers three distinct benefits for married people:
What's at Stake?
The difference between the best and worst possible decision of when to elect Social Security can be well over $100,000!
Case Study: A 62-year-old couple, with one high earner and a stay-at-home spouse, who both live to average life expectancy could lose as much as $240,000 in family benefits by making the worst possible decision for when to take Social Security.
What if there was a tool that could analyze hundreds of election age combinations and tell you which was the best option for you?
Family Benefits Analysis
Using software analysis, we examine hundreds of possible outcomes—including 81 possible outcomes assuming each spouse elects his or her own record, 81 possible outcomes if the lower-earning spouse elects a spousal benefit, and 162 possible survivor benefit totals that vary based on when each spouse elects benefits—and find the one option that offers the highest expected lifetime benefit.
We provide a summary of the best, worst and two common election strategies. See chart below:
We then build the rest of your retirement plan around your optimal Social Security decision.
Why base the foundation of your retirement on Social Security?
For most people, Social Security is the only income stream that:
- Is adjusted annually to keep up with inflation
- Is tax-advantaged—at worst, it's only 85% taxable as ordinary income
- Will continue to pay you for as long as you live
- Is backed by a government promise