Social Security Choices

Making the Right Choice

Approximately half of all Social Security retiree claimants start their retirement benefits as soon as possible, at age 62. The second most popular claiming age range for retirees is 65-66, with about 25 percent of all eligible persons starting benefits then. For more details, see the Office of Retirement and Disability Policy's Annual Statistical Supplement.

For most people, these are not the best choices for maximizing the overall value of their Social Security benefits. In other words, our analyses suggest that most people are making costly mistakes with their Social Security claiming decisions.

Social Security is an annuity and will pay monthly benefits until you (and your spouse, if applicable) pass away. This means that you cannot outlive your Social Security. The longer you live the more you will benefit from Social Security. Because Social Security benefits are much higher if you claim later, you can help protect yourself from financial distress later in life if you put off claiming your benefits.

Here are some important features of Social Security that you should consider before making a choice as to when to claim you benefits:

  • Social Security is inflation adjusted so your future benefits will have the same purchasing power tomorrow as they have today. Retirement can be a very long period and what will happen with inflation is very hard to predict. Social Security is probably the best way to protect your finances against future inflation.
  • For married couples, Social Security provides a benefit to the primary beneficiary and a spousal benefit which can be as much as 50% of the primary benefit. (Divorcees can also get a spousal benefit.)
  • When one member of a married couple dies, the surviving partner can collect the higher of the two benefits. This means that the person with the higher benefit should consider not only their own prospective lifespan, but also the lifespan of their partner. For the average 62-year-old couple today, there is a 40 percent chance that at least one person will live into their 90s. For more details, see "The Social Security Claiming Guide".

These are only a few of the many features of Social Security that add complexity to the decision-making process. We can help you with this difficult decision by providing you with a customized analysis which identifies the best claiming strategy specifically for you. See our page on "Why a Custom Analysis" for a more detailed description of what we can do for you, or, if you are married, check out our free custom assessment calculator to see how much you can gain from using sophisticated strategies.