Sunday, December 10, 2017

Our Social Security Maximization Strategy

Last week, I had a discussion with a Social Security expert and have revised our strategy for when to take Social Security benefits.   Until this call, I was analyzing option on how to maximize our total benefits received based mainly on when I started taking Social Security benefits.   The analysis showed that it was financially superior for me to start taking benefits at 62..

The expert offered a different strategy: Maximize the higher income benefit first and then maximize total benefits received.   Her point was that the higher income benefit would be the ONLY benefit if one of the couple passed away.  Therefore, it would be important to ensure the higher benefit is as close to the maximum as possible.  From her experience, the surviving spouse (often the woman) was shocked when she learned how low the survivor's benefit was because the retirement benefit was started at 62.

However, while waiting to maximize benefits, my spouse can start her Social Security benefits at 62, and thereby enabling us to collect auxiliary benefits due to minor children.  I had not considered this approach prior to consulting with the expert.

So my new strategy is to wait until 70 before starting my retirement benefits.    This will maximize our retirement benefits when one spouse passes away.  In addition, we will plan to have my spouse start her reduced benefits at 62, which will give us some Social Security income prior to me turning 70.

For more on New Beginnings, check back Sundays for a new segment.

This is not financial, retirement or Social Security advice. Please consult a professional advisor.

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pfstock said...

Hi! Could you clarify what is meant by collecting "auxiliary benefits" in the third paragraph? Also, what is the difference in age between you and your spouse? From the writing, I am guessing that it has to be much less than 8 years difference for the strategy to make sense.


Laura said...

This is our strategy as well. I’m older than my husband and he’s been a teacher most of his life so we’re waiting for me to turn 70 to collect my SS and he will start when he’s 62. He only worked minimally outside of academia so at 62 he will only get $300 a month. :)

Super Saver said...

@pfstock. Sorry for the delayed response. I've been remiss in moderating comments. Briefly, "auxiliary benefits" are Social Security (SS) payments to minor children, and spouses caring for minor children. Since we had kids late, one or both of children will be minors depending on which one of us claims SS benefits. A minor child and child in care spouse can get up to 50% of the full retirement age benefit of the SS recipient, up to the maximum family benefit.

Yes, we are less than 8 years apart, which enables us to use the wait to 70 strategy for me and collect some auxiliary benefits.