Waiting Until Age 70 to Claim – Revisited!

Over the past 10+ years of consulting on when to claim, I have in most cases recommended that the higher earning spouse delay claiming on their own record until they reached at 70.  The reason was twofold;  #1  I wanted to earn the 8% per year delayed credits between age 66 – 70  and  #2  Upon the death of either spouse the surviving spouse inherited the greater of the two benefits, but not both.

In the vast majority of cases the husband has earned more, they might be a year or two older and women tend to live longer.  Granted there are definite exceptions to this, but it has proven to be relatively true in the majority of my clients.   There are several references within the Bible about protecting the Widows,  if I can get men to delay claiming Social Security until age 70, then I am doing my calling since they’ll inherit greater benefits for the rest of their lives!

I think this advice is still sound in most cases, but recently there have been exceptions to advice, so lets revisit why and where this might not be true;

• Jim 67 check at FRA $3278 –   Debbie 72 check at FRA $474
• Jim was planning on waiting until age 70 before claiming, while Debbie a school teacher was receiving a TRS pension and would have lost most of her spousal benefits due to the GPO. She also claimed her own benefits @ 65
• With the elimination of the WEP and the GPO this sheds an entirely different light on the advice I had given a couple of years ago
• Debbie cannot receive spousal benefits until Jim files thus if he waits another 3 years, she too must wait and continue on her own record (See Primary)

                     See the Numbers!

Why Jim might want to claim now

• If he claims now this check will be $3,300 per month vs $4,400 if he waits until 70
• However, Debbie can claim spousal immediately and receive $1,607 vs $442
• Their joint income from Social Security of $4,900 per month or $58,800 / yr.
• They’ll be approximately $156,000 ahead by 2028 when Jim turns 70
• The breakeven between Waiting until 70 (Primary Strategy) is when Jim is 90 without considering the time value of money
• Unless Jim had major life shortening which he doesn’t and Debbie is 5 years older than Jim, it probably doesn’t make sense for Jim to delay in order to protect her

Another instance where it might not make sense to delay would be for a high earning individual who had a much lower earning spouse or one who did not qualify for Social Security on their own record.  Having that individual claim at FRA would allow both spouse to claim benefits at that time.

I guess the bottom line is we still need to explore ALL OPTIONS and RAMIFICATIONS of such decisions before pulling the trigger.

I just got back from Greece and have been working on a book that I’ll have published, I’ll give you a sneak preview hopefully next month.

It was great presenting in Dallas at Convergence on May 2^nd and look forward to meeting many of you in Houston on June 17 at South Shore Harbor.