Thursday, May 21, 2015


If anyone ever tells you they know the answer to this question then run away from their advice as fast as you can!  The decision to begin collecting social security is agonizing and everyone seems to have a different opinion.  The decision becomes exponentially more complicated if you are also eligible for spousal benefits in addition to benefits based on your own work history.   

Unfortunately, the Social Security Administration does not provide an easy way to calculate the monetary value on the decision to defer social security until age 70.  The SSA calculators simply project the change in monthly benefits by waiting to age 70, but this does not paint the entire picture.

For example, assume you live to age 90 and begin collecting social security at age 62.  How would this compare to collecting social security at age 70?  Based on these two different options, do you have any idea as to the difference in your total lifetime social security income?  I recently calculated the projected difference in total lifetime social security income for a married couple and they were stunned to learn they are projected to receive an additional $300k in lifetime social security income by waiting until age 70 to claim benefits (based on certain life expectancy assumptions). 

According to the Society of Actuaries, an American couple both aged 80 have a 62% probability that either spouse will live to age 90.  As life expectancy for retiring Americans is at an all-time high, it is safe to assume that more and more Americans would be better off by deferring social security benefits.

The most important point is that nobody knows if any strategy is the best strategy because none of us know how long we will live.  In general terms, the shorter your life the more you benefit by claiming social security early and vice versa.  The best thing you can do is evaluate all of your options and make an informed decision.  This is no easy task, but, at some point, you’ll need to decide.  Feel free to call our office if you would like some help in reviewing your options.

Nick S. Wold, CPA, MA