When to Claim Social Security

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As a Certified Financial Planner, I run a practice specializing in guiding families to and through retirement. A question we almost always hear is, “When should I take my Social Security?”

The best answer to that question often depends on the client’s personal situation, but clients are often unaware of three common scenarios that may lead them to leave money on the table.

When a client asks me when they should start taking their Social Security, I always respond with the simple question, “Have you ever been married?” The right advice will depend on the answer.

The Married Couple—Both Working

More often than not, I see married couples heading toward retirement, planning to claim their own retirement benefits at what Social Security calls full retirement age.

This could be anywhere between 66 and 67 today, depending on their birthdates. Some clients are willing to wait until age 70 to “turn on” their benefits. They realize their benefits increase by 8% every year that they wait, and they are willing to sacrifice the benefits from age 66 or 67 to age 70 to receive the higher payout for the rest of their lives.

In this process, an almost hidden feature, called the spousal benefit, is often overlooked. The spousal benefit is thought of as a benefit for a non-working spouse. A spouse who never worked can still collect 50% of the working spouse’s benefit. The non-working spouse can claim it once the working spouse has filed for benefits. What people don’t realize is that if both spouses are working and are eligible for their own benefits, the spousal benefit remains. You might not think you want it, because it’s less than your own benefit based on your own working record. The surprise is that Social Security will pay you the spousal benefit by itself, while you wait until age 70 to collect your own benefit.

Our most common recommendation for a married working couple is that one file for their own benefits at normal retirement age and the other spouse file for spousal benefits only, also at their full retirement age (age 66–67). This allows one spouse to defer claiming their own benefits, which continue to grow at 8% per year. Doing this allows a spousal benefit to be paid for three to four years—a benefit that could easily have been missed. The most important thing to remember is that nobody should file for benefits early.

The Divorced Applicant

The benefit for a divorced individual is frequently overlooked because the marriage may have ended long ago or the applicant may simply want nothing to do with their former spouse.