Two-thirds of Americans take social security at age 62. At 95 years of age, that could mean the loss of over $300,000 in additional earnings potential had the recipient waited until age 70 to start taking the benefit.
Rule of thumb: wait to start your benefit, if you can, and have other sources of retirement income. By the way, I hate rules of thumb because there is always another side.
Rule of thumb: the social security office's default advice to applicants is to explain to them how they can obtain the highest benefit NOW. They often will not explain the potential benefits of waiting until age 70.
Rule of thumb: married and lower income person's PIA (primary insurance amount due at full retirement age) is more than 1/3rd of the higher person's PIA benefit:
(1) lower wage earner takes benefit based on their own record at age 62
(2) higher wage earner takes spousal benefit at full retirement age (that is a 50% benefit)
(3) higher wage earner then switches to their own benefit at age 70 (much higher benefit)
(4) lower wage earner then takes 50% of higher earner's record, if higher than their own
Rule of thumb: when lower wage earner spouse is much lower than higher earner (less than 1/3 rd):
(1) lower wage earner takes benefit based on their own record at age 62
(2) higher wage earner "files and suspends" at their full retirement age
(3) why? so the lower wage earner spouse can then take the spousal benefit of the higher wage earner
THIS IS LEGITIMATE (at least today) AND GOOD PLANNING.
(4) higher wage earner then takes their age 70 benefit (which is much higher)
It is important to note that age 62's reduced benefit and the age 70 increased benefits are in actuarial terms the same and carefully calculated by the social security agency. Delaying benefits is a way to obtain "longevity insurance" should you live longer than the "averages". Otherwise taking the benefits at age 62 or age 70 come out the same if you have an average life expectancy.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.