June 3, 2011
Optimizing your Social Security benefits
I attended a terrific presentation on Social Security benefits – earned, spousal, survivor (and divorced spousal and survivor) – by Elaine Floyd of Horsesmouth at the FPA conference in San Francisco this week. This was the first of several similar presentations I have sat through that has presented all the many complexities of Social Security in a comprehensible manner. The focus was “when to take benefits,” a question many of my clients who are approaching, or are in, their 60s are asking. I am planning a full write-up of what I learned in my July client letter, but here are a few key points:
– Do not take benefits early. Taking benefits before what is termed “full retirement age” (FRA), is rarely, if ever, advisable. Many people ask whether they should start at age 62 and I strongly recommend against this option except in cases of extreme financial hardship. FRA is currently 66 for those born 1943 or later, rising to 67 for those born after 1959.
– Defer the higher wage earner’s benefits start until age 70 in order to maximize lifetime benefits for a couple. This is particularly advantageous when there is a younger spouse.
– Take spousal benefits at FRA. One member of a couple should take spousal benefits once they both reach full retirement age. I will outline a technique for allowing the primary benefits for both spouses to continue to increase until age 70, even after filing, in my July letter.
Floyd has made Social Security benefits the focus of her consulting work. She said in her presentation that expects a legislated “fix” to Social Security in the coming years, one that will certainly include somewhat later eligibility, and that this will allay the expected financial shortfall in the program. Gen Xers, take heart!Tags: Social Security
Martin Weil is a Certified Financial Planner™ with over thirty five years of investment experience.