T Rowe Price recently rolled out a new Social Security benefit calculator. Unfortunately, their calculator is not ready for prime time. In fact, in its current state, it is not ready for any time. It gives incomplete and misleading advice that, if followed, could cost some married couples $100,000 or more. I will illustrate some [...]
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On Social Security, Birds, Bushes, and Hands: The Time Value of Money
Many people we encounter are dead set on claiming their Social Security retirement benefits immediately when it becomes available. They often use some variation of the well-known proverb: a bird in hand is worth two in the bush. In citing this proverb, these individuals are expressing a rational preference for money now over money later. [...]
How to Calculate the Social Security Supplemental Spouse Benefit
A client recently asked me: “Should I claim my modest Social Security retirement benefit early, say at 62, and then switch to my larger spousal benefit later on?” This question shows a serious misunderstanding of the relationship between retirement benefits and spousal benefits. One can never switch from retirement benefits to spousal benefits. If a [...]
Presidential Debate: Romney and Obama on Social Security
During the first Presidential Debate the two candidates were directly asked to address the issue of Social Security. Here is what they said: LEHRER: All right? All right. This is segment three, the economy. Entitlements. First — first answer goes to you, two minutes, Mr. President. Do you see a major difference between the two [...]
How Do I Maximize My Social Security Benefits?
There are two answers to the question expressed in the title. First, if you are interested in maximizing your monthly Social Security retirement benefits, all you need to do is wait until age 70 to claim your benefits. If you are looking to maximize your monthly spousal benefits, then you should wait until your full [...]
A Misleading Tool: Social Security Break-Even Calculator
Those thinking about whether to claim their Social Security benefits now or later often ask the following question: “If I delay claiming and give up benefits now in return for greater benefits later on, how many years must I wait to get those forgone benefits back? This is known as the “Social Security breakeven time [...]
Falling Short: The AARP Social Security Benefits Calculator
The AARP Social Security benefit calculator was introduced to much fanfare in July 2011. While the AARP calculator is free and easy to use, it is not as helpful as it first appears, especially for married couples. According to the AARP, their Social Security benefits calculator “…will show you why most people should wait as [...]
Married and Turning 66? Time to Consider Your Social Security Claiming Options
Many people who are still working at age 66 have not looked into their options for claiming Social Security benefits. They simply plan to claim their benefits when they eventually retire or even wait until 70. Delayed claiming is generally a good idea because it means that you will get a larger retirement benefit, but [...]
Social Security Benefits for Ex-Spouses Better than for Spouses
A little known fact is that Social Security offers ex-spouses two valuable benefit claiming options not available to spouses. These advantages can be worth thousands of dollars to a person who meets Social Security’s definition of a divorced person eligible for ex-spouse benefits. To illustrate these advantages, we’ll consider a simple example. Suppose Burt is [...]
A Tale of Two Social Security Strategies: File and Suspend versus Restricted Application
When at least one spouse reaches full retirement age (presently 66), two potentially valuable Social Security claiming options become available: 1) the file and suspend option, and 2) the restricted application (or free spousal) option. The former gets far more publicity, and is better known, than the latter option. But, we find good reason to [...]