Money Advice

Finding your Social Security ‘sweet spot’

Posted by The Simply Money Advisors Team on Mar 13, 2019 8:15:18 AM

Social Security.

Do you know how it fits into your retirement plan?

If you don’t, it’s not surprising. Social Security has become one of the most confusing and complex aspects of retirement. You need to consider:

  • Your age
  • The type of benefit you’re claiming
  • Your health
  • Other retirement income
  • Taxes
  • Potential changes to the program’s rules and benefits

Talk about overwhelming.

Even worse? One false move or bad decision can cost you thousands of dollars of retirement income.

This is probably why our Social Security workshops are our highest-attended presentations – while you may pay into the system just one way via FICA taxes, how (and when) to claim is a whole other story.

In fact, did you realize there are nine ways for a single person to claim Social Security, while there are 81 for a married couple?[i]

Here are our suggestions and reminders for when you’re trying to figure out when to start claiming.

How is it calculated?

Social Security’s calculation to determine benefit amounts is fairly complex. But the basic components include:

  • You must have 40 work credits (about 10 years of work) to qualify
  • Uses your highest 35 years of earnings
  • A “0” will be used if you didn’t work in a given year (lowering your benefit)

If you want the biggest monthly check possible, you need to maximize your earnings while you’re working.

And if at any time you had a “0,” keep working until that zero comes off your earnings history. Even part-time work is better than nothing.

Your age plays the biggest role

Social Security uses something called “Full Retirement Age” (FRA) to determine when you’re allowed to claim your full benefit.

The FRA is currently age 67 for anyone born in 1960 or later.

In most cases, the earliest you’re allowed to claim is age 62 (it’s also the most popular time to claim, according to the Social Security Administration).

But if you claim at this age, your monthly benefit will be reduced since you’re getting benefits for an additional 60 months.

On the other hand, you’re given an incentive to delay your claiming: an 8% higher payout for every year you wait past your FRA.

Let’s break this down with a real scenario:

  • Dave’s FRA is 67. His full monthly benefit at this age is $1,000.
  • At age 62, Dave would get just 70% of his full benefit, or about $700 a month.
  • At age 70 his monthly check would be about $1,240 (124% of his full benefit).

What’s your marital situation?

Social Security will always pay the benefit based off your own work record first.

But there are other types of Social Security benefits available as well. These include:

  • Spousal benefits
  • Widow/er benefits (a subset of survivor benefits)
  • Ex-spouse benefits          

Spousal benefit

Depending on your age, you can receive anywhere from 32.5% to 50% of your spouse’s full benefit.[ii] If you’re claiming a spousal benefit:

  • You must be at least age 62
  • Your spouse must already be collecting Social Security
  • The two of you must be married for at least a year
  • The benefit on your own work record must be less than half of your spouse’s full benefit

Widow/er benefit

If your spouse passes away, you’re allowed to claim a widow/er benefit. If you’re claiming a widow/er benefit:

  • You must have been married for 9 months or longer (in most cases)
  • Your spouse must have worked long enough to qualify for Social Security
  • You must be age 60 or older (50 or older if disabled)
  • You are not allowed to also get a benefit based on your own work record (instead, you’ll get the larger of the two benefits)

The amount you’ll receive is dependent upon:

  • Your spouse’s full benefit amount
  • Whether or not your spouse had already started collecting benefits before their death

But like with most Social Security circumstances, the earlier you claim a widow/er benefit, the less you’ll receive. For instance, if you start collecting at age 60, you’ll get 60% of the full benefit.[iii]

Ex-spouse benefit

And here’s a type of benefit many pre-retirees are surprised exists – an ex-spouse benefit!

Yes, you can claim Social Security off of your ex’s work record.

In fact, you can receive up to half of your ex’s full benefit (and your ex will never know).

If you’re claiming an ex-spouse benefit:

  • You must be at least age 62
  • You must be unmarried (but your ex can be remarried)
  • You must have been married for 10 years or longer
  • Your ex must be entitled to retirement or disability benefits
  • The benefit based on your own work record is less than what you would get based off your ex’s

Problems ahead

The general consensus from a pure “numbers” standpoint is that it usually makes the most sense to wait as long as you possibly can to claim your benefit, especially if you’re healthy.

But we disagree, at least in certain circumstances.

We say this because of the potential funding shortfall Social Security is facing: in just 15 years, there will be fewer workers paying into the system to cover an increasing number of beneficiaries.

If no changes are made to the program by this point, beneficiaries will receive just 77% of their promised benefit.[iv]

What could fix this deficit? Congress could:

  • Adjust the full retirement age
  • Implement ‘means testing’
  • Increase or eliminate the payroll tax cap
  • Recalculate the cost-of-living adjustments
  • Institute some combination of all these ideas

So, if you’ve saved well over the years and don’t need Social Security to live on in retirement, you might consider claiming as soon as you are eligible.


As a good saver, you’re the most likely to get nailed by some of these potential changes, such as means testing.

Radical approach, we know. But that’s the reality we’re all currently facing.


It’s a lot, isn’t it?

And we haven’t even touched on the possibility of your benefit being taxed depending on your retirement income, what happens if you claim while you’re still working, or why your benefit will likely be reduced if you have a public pension.

This is why, at Simply Money Advisors, we encourage everyone approaching retirement to work with a fiduciary financial advisor. This person will look at your Social Security situation within the greater context of your retirement plan and make recommendations based on your best interests.

Everyone’s sweet spot is different. When (and how) to claim is a very personal decision that comes down to your unique circumstance.

Have more questions? Register for one of our Social Security workshops happening the week of March 18th all around the Tri-State.







Topics: Social Security


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