Well, maybe not everything, but the decision on when to claim Social Security benefits will have a lasting impact on the amount your clients receive.

Generally speaking, your clients are eligible to receive 100% of their Social Security benefit at full retirement age (FRA)¹—currently between ages 66 and 67, depending on your birth year. However, they can start receiving benefits as early as age 62 and as late as they like, but, as we’ll see, there’s little or no reason to delay it beyond age 70.

If they decide to claim benefits before their FRA, the benefit amount will be reduced. (Obviously, the earlier you claim, the larger the reduction.) On the other hand, for each month you delay claiming Social Security, your benefit amount increases until you reach age 70, after which the benefit amount does not increase.

If you were born between 1943 and 1954, here’s a high-level summary of the benefit percentages:

Chart 1

For clients born in 1960 or afterward, the 75% drops to 70% and the 132% drops to 124%. Sound confusing? Well, it certainly can be, and we’ve only just started.

In the interest of keeping this as succinct as possible, I’m going to cover this issue at a high level. My hope is to make you aware of things to consider and further investigate before helping your clients make decisions.

How to help them decide

Traditionally, the decision on when to begin Social Security benefits was largely based on your clients’ needs: If they need the benefits to meet basic living expenses, then they should take them.

This hasn’t changed. What has changed is that people are living longer, so the impact this decision has on an individual’s or a couple’s financial security is even more important. As a result, this decision—like so many other retirement income decisions—warrants careful consideration.

So the first consideration is still need, but how do we define need?

Need is commonly defined as having no other money, such as employment income, personal savings, or retirement savings, to meet basic living expenses.

Historically, many retirees have thought they’d rather spend the government’s money than their hard-earned savings. I don’t disagree, but it’s important to be aware of all the facts as you consider your clients’ needs.

Let’s start with the premise that it’s usually advantageous to delay collecting benefits until age 70²—even though this may require your clients to continue working or use their personal and/or retirement savings to fill the gap years. Why? There are two primary reasons.

First, for a 65-year-old couple,³ there’s a more than 60% chance that one of them will live to age 90. So delaying benefits for them and/or their spouse to have the potential to receive a higher benefit amount for a longer period of time is likely to be the better financial decision.

Second, every year clients delay taking benefits beyond the earliest possible starting point will boost their annual payout as much as 8%, and this figure is adjusted for inflation. Let’s face it: A guaranteed return of up to 8%, in real terms, is not easy to find in the current economic environment, especially on a risk-free basis.

Here are the details on the changes from the editorial note above. 

A possible strategy

Below is an illustration of a common strategy couples use. This strategy, which I refer to as the combo strategy, incorporates two claiming strategies: file and suspend and restricted application. This strategy allows both of you to delay receiving retirement benefits on your own records so you can get delayed retirement credits. For simplicity, let’s assume these individuals are the same age with the same earnings histories.

Here is the way, as a couple, they could maximize each spouse’s expected lifetime benefits:

Chart 2

This combo strategy allows one person to collect spousal benefits from FRA to age 70, while at the same time allowing both individuals’ benefit amounts to increase annually by 8% plus inflation. For this couple, the strategy is likely to produce the highest total Social Security benefits.

The decision on when to claim Social Security benefits can be complicated, to say the least. Many couples aren’t the same age and don’t have similar earnings histories or life expectancies. To me, this is one of those areas where putting in the time to think things through—and providing advisor’s alpha—may really pay off with clients over the long term.

I would like to thank my colleague Katherine Lamb Kellert for her contribution to this blog.


1 Currently age 66 if you were born between 1943 and 1954, or age 67 if you were born in 1960 or afterward. For those born between 1955 and 1959, two months are added to the full retirement age each year.

2 Typical reasons for not delaying benefits: financial need, poor health and/or a shorter-than-average life expectancy.

3 I’m focusing on couples in this illustration because the considerations tend to be more complicated.


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