Social Security timing strategies


David S Meyers CFP

Recently, I've run some numbers regarding the value of delaying taking
Social Security.

It's really quite amazing, and pretty easy to see when you're talking
about a single person putting off taking it for a year. But when you
get a couple, particularly when both of them have earnings, it can get
very complicated.

This article I saw today explains a couple of the issues pretty well:

The author, Scott McLeod, a NAPFA-Registered Financial Advisor, answers
a specific question regarding a spouse taking benefits, but in the
process, he adds some great information about a couple of strategies:
Claim and Suspend. If you are FRA, you can file for benefits and then
suspend them until a later date. At age 62, your spouse can then start
receiving spousal Social Security checks based on your work history,
while the value of your future payments continues to increase. This
plan works best for couples with very different earnings histories,
where the higher-earning spouse would like to keep working and the
lower-earning spouse wants to retire and would be better off with the
spousal benefit than his or her own.
Claim now, claim more later. If you and your spouse are ready to
retire, and have reached FRA, you may be able to achieve a long-term
gain in payments by initially claiming spousal benefits, allowing your
own benefits to grow, and then switching to your own benefits later.
You will receive lower monthly checks in the early stages of retirement
in exchange for higher payments later. This strategy works if your
benefit at FRA is higher than your spouse's but not so much higher that
your spouse would be better off with the spousal benefit. That's an
important difference between the "claim and suspend" strategy. This is
also a good strategy if your spouse is in good health, and you expect
him or her to live a long life.
Some good stuff there.

Also, Larry Kotlikoff has a regular column on now about Social
Security and related issues. Always worth reading:

David S. Meyers, CFP®
disclaimer: discussions in are for
educational purposes only and should not be construed as financial
advice. For personal financial advice, please consult directly with a



bo peep

An unusual method for high income people is to file for Social Security more than a year before they need it, when they already have enough other income to live on. They invest the Social Security funds received for a little less than a year. As the one year anniversary aproaches, they "reboot" their Social Security by withdrawing their original application, and paying back all the Social Security funds received, but not the interest gained by investing the funds. At some point in the future, they submit another Social Security application, and start receiving their "real" Social Security payments.

This gives them a bit more flexibility in deciding when to actually go on Social Security. They can only use this technique one time, by submitting this form less than a year after they started on Social Security:



Ron Peterson

The spousal benefit works.

In addition there is an advantage of delaying SS until the age of 70.

Bad health such as CVD, diabetes, cancer, et cetera are good reasons for taking SS early.

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