How can I maximize social security benefits?

The decision on when to file is a strategic opportunity.

Article published: July 18, 2024

Much of the financial news in the recent year focused on rising inflation and how your dollars don’t go as far as they used to. In the midst of this news, it’s important to remember there is a financial benefit designed to grow with inflation: Social Security. Most people pay into the Social Security system throughout their working lives and can look forward to supplementing their retirement savings with Social Security retirement income. And Social Security benefits receive a cost-of-living adjustment every year to keep pace with inflation.

Armed with that knowledge, you may feel inclined to start your benefit at any time. But the decision on when to file is a strategic opportunity where you can maximize your total lifetime Social Security income, an important aspect of your financial plan.

When is the best time to start social security benefits?

We’ll review options for singles, married couples, widows and widowers, divorced individuals and families. But first, here are some basics.

Your primary insurance amount is the benefit you will get if you start Social Security retirement benefits at your full retirement age. You can see your projected PIA on your Social Security statement, which is available to view online when you create a my Social Security account at SSA.gov. Your FRA is based on your year of birth and is most likely somewhere between the ages of 66 and 67. For example, the FRA for someone born in 1958 is 66 and 8 months.

 

Individuals

You are allowed to start Social Security benefits as early as age 62, or anytime between age 62 and your FRA. But if you decide to start benefits early – before FRA – your monthly benefit amount will be less than your PIA. Your benefits will be reduced by a small percent for each month before your FRA that you file. And that reduction to your benefit will be permanent. So, if you were born in 1961 and you start your benefits at age 62, your PIA will be reduced by 30%.

Conversely, if you postpone taking your benefits until after FRA – up to age 70 – you can earn delayed retirement credits. Your PIA increases by a small percent for each month after FRA that you delay – up to 8% per year. And that increase is permanent. You can earn delayed retirement credits up to age 70, so there’s no reason to postpone starting Social Security benefits beyond age 70.

Some people rush to file at age 62 because they worry about the viability of the Social Security program, they’re concerned that they may not live long enough to collect enough benefits, or they just feel like they’ve earned it and they want their income now. But by rushing to claim benefits, you may not be maximizing your total lifetime Social Security income.

We typically recommend waiting until at least FRA to file for benefits to claim your full PIA, unless there are other factors to consider. It may be best to delay until age 70, especially if there is longevity in your family and you may enjoy a longer life expectancy. Remember to consider all the variables – life expectancy, your job situation, available retirement assets – to determine the best timing for you.

Married Couples

It’s important to look at the combined Social Security income potential for a married couple to determine your optimal filing plan.

Just as you have carefully planned together to save for retirement, you must carefully plan to optimize your potential Social Security income.

 

Basic rules for couples: If you both worked enough to earn a Social Security retirement benefit, you can each claim those benefits independently. You may be able to claim a spousal benefit instead – half of your spouse’s retirement benefit – if you did not work enough to earn your own retirement benefit, or if your retirement benefit is smaller than half of your spouse’s benefit.

Two things to remember: one, you can only claim a spousal benefit if your spouse has already filed for their benefit; and two, you are only eligible for half of your spouse’s retirement benefit if you wait until your FRA to start your benefits.

The optimal claiming strategy depends on many factors such as the PIAs and ages of each member of the couple. It may be best for both of you to wait until FRA to file for benefits, or for one person to file while the other delays.

Beware there are two scenarios that can upset a couple’s strategy:

Starting your own benefit early will reduce your spousal benefit later.
If your spouse has not yet filed for benefits, you may be able to file for your own retirement benefit now and switch to a spousal benefit later when your spouse files. If you start your retirement benefit before FRA, however, your benefit will be permanently reduced, and that reduction will affect the spousal benefit. Your eventual spousal benefit will be less than half of your spouse’s retirement benefit.

Planning to file for a spousal benefit now and switching to your retirement benefit later.
If your spouse is collecting benefits when you file, you will automatically be filing for either your own retirement benefit or a spousal benefit, whichever is higher. This is known as the deemed filing rule. It is generally no longer possible to file for only a spousal benefit and let your own retirement benefit grow. Only people born before Jan. 2, 1954, are eligible to file a restricted application at FRA for spousal benefits only.

 

Surviving Spouses

Widows and widowers can receive 100% of the benefit their spouse was receiving or was eligible to receive if they wait until their full retirement age as a survivor to file. They are eligible to receive a reduced survivor benefit starting at age 60 (age 50 if the surviving spouse is disabled). And if they get remarried before the age of 60, they are not eligible for a survivor benefit at all.

The survivor benefit is another reason to consider delaying filing for Social Security benefits. If you pass away before your spouse, they may be eligible to collect your full benefit for the rest of their life. By delaying now, you provide them with a higher benefit in the future.

If your spouse passes away before you’ve begun any benefits, there are some strategic options to consider. The deemed filing rule that applies to spousal benefits does not apply to survivor benefits. So, you can start your own reduced retirement benefit as early as age 62, and switch to a 100% survivor benefit at FRA. Or you can start a reduced survivor benefit as early as age 60, and switch to your own retirement benefit at FRA, or even earn delayed retirement credits up to age 70. The best option will depend on your age and the amount of each benefit.

Divorced Spouses

Divorced spouses may be able to claim benefits – either spousal or survivor benefits – on their previous spouse’s work history if the marriage lasted for at least 10 years. Remarriage and your own retirement benefit may affect your options. If you’re divorced, check with the Social Security Administration on available benefits before determining your overall Social Security strategy.

Families with Young Children

In addition to spouses, children younger than 18 and those any age who were disabled before age 22 may be eligible for Social Security benefits from a parent who is retired or has passed away. There is a Social Security benefit family maximum, but for some families the optimal strategy might take into consideration other family members.

3 questions that could impact your social security claiming decision

How long do I expect to live? 
People with longer-than-average life expectancies should consider filing later to maximize their lifetime benefits. Conversely, health concerns or unexpected loss of income might be a reason to file early.

Will my spouse need extra income if I pass away first? 
Your spouse may be eligible to collect 100% of your benefits when you die, so you may want to file later to maximize that amount.

Do I qualify for a higher spousal benefit? 
Filing early for a reduced retirement benefit will decrease your future spousal benefit. And most people can restrict their application to a retirement benefit only if their spouse has not started receiving benefits.

Your Social Security filing strategy represents an opportunity to maximize a lifetime of benefits. And the rules are sometimes complicated and confusing. Remember to consider all the variables.

This material was prepared for educational purposes only. Although the information has been gathered from sources believed to be reliable, we do not guarantee its accuracy or completeness.

Decisions regarding Social Security are highly personal and depend on a number of factors such as your health and family longevity, whether you plan to work in retirement, whether you have other income sources as well as your anticipated future financial needs and obligations.


Jennifer Chomicki, CFP®, MBA

Advanced Planning Strategies Senior Manager

Jennifer Chomicki, CFP® began her career in public relations and communications and transitioned to the financial services industry after earning her MBA. She previously worked as a financial planner, helping clients identify and achieve their financial goals for more than a decade. In her current role as a senior manager of the Advanced Planning Team, she combines her financial and commun...