Social Security Analysis

Maximizing your Social Security income is an important building block for retirement. United Income, a financial-planning advisory service, released an important study in 2019 called, “The Retirement Solution Hiding In Plain Sight.” Using government data and proprietary software, it calculates how much money retirees have lost, and are losing, by making mistakes about when to start claiming Social Security benefits.  This study found that 96% of retirees are leaving up to $111,000 per household behind by claiming Social Security at the suboptimal time. The majority of retirees choose to begin receiving Social Security payouts within a few months after turning age 62 or immediately after they stop working, even though it is generally beneficial to delay the benefits.

Because everyone has a different situation and there are many claiming strategies available, you should determine what’s best for you based on your age, life expectancy, income needs and other retirement assets. A few small mistakes can take a big hit on your golden years.

The earliest age you can start receiving Social Security is age 62, but if you file before full retirement age (as defined by the IRS), you’ll be looking at a reduced benefit of approximately 75% of the amount you’re eligible for. Full retirement age depends on your year of birth. You can also delay your filing past full retirement age. For each year you delay your benefit, up until age 70, your benefit will grow 8% enabling you to receive a maximum of up to approximately 132% of your regular benefit amount.  Delaying your filing will clearly leave you with more money on a monthly basis but you need to consider whether it will mean getting the most money on a lifetime basis. If you don’t expect to live very long because of health issues or your personal family history, then it could make more financial sense for you to claim benefits at full retirement age or even sooner to receive the highest lifetime payout. 

If you have already started collecting and are now regretting it you can still take some corrective actions.  Social Security beneficiaries between full retirement age and age 70 can voluntarily suspend payments to maximize earnings in the future. If you started collecting within the last 12 months, you can even withdraw your claim by repaying the benefits you have already received.

To maximize Social Security benefits for you and your spouse, you need to know which of the separate claiming strategies for married couples is right for you. Maximizing Social Security benefits isn’t easy as there are hundreds of rules governing payments alone.