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 retirement age to claim them.  (Spouse benefits include ex-spouse and surviving spouse benefits.)

Second, if you are seeking to maximize your lifetime Social Security retirement or spouse benefits, then answering this question can be vastly more complicated than answering the first one.

Let’s consider married couples, the group that faces the most difficulty in finding the claiming strategy that maximizes lifetime Social Security benefits: they face literally hundreds of possible claiming options. At www.SocialSecurityChoices.com  we have found the following factors to be the principal underlying determinants of optimal claiming strategies for married couples:

  1. Length of planning horizon (e.g., do you and your spouse have a relatively short life expectancy because of poor health; or, do you expect to live well into your 80s or even 90s?);
  2. The discount rate for converting future values into present value equivalents (for the details about this factor, see our discussion on the main website).
  3. The ratio of the wife’s primary insurance amount, or PIA (that is, retirement benefit at full retirement age) to the husband’s PIA;
  4. The age differences between the husband and wife.

For ex-spouses and widow(er)s, determinants (3) and (4) above are irrelevant because only one spouse is directly involved in claiming decisions for this group.  The optimal claiming determinants for these two groups include (1) and (2) from above, plus (3′)

3’.  The ratio of the person’s PIA to their maximum ex-spouse or widow(er)’s  benefit.

For singles, the problem is much simpler in that the optimal choice depends only on factors (1) and (2) above.

If you need help in solving your claiming puzzle, check out our separate benefit calculators for married couples, singles, and widow(er)s. (The calculator for ex-spouses is under development and should be available soon.)

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