Procrastinate

Yes, you read that right. Putting off your Social Security benefits as long as possible is actually the best way to go for many retirees.

The longer you wait (up until age 70) to receive your Social Security benefit, the higher your monthly payment will be. So although you can claim Social Security starting at 62, waiting can be worth your while.

For example, say you were born in 1960. Based on your earnings history through the year you turn 62, let’s say you’ll receive a $1,500 benefit each month when you reach FRA at age 67. The chart below shows the percentage of full benefits you’ll receive depending on your age when you begin collecting—and how much more you could receive if you wait.

Age you receive benefitsPercentage of full benefits you’ll receiveMonthly benefitWhat you’ll receive if you wait until age 67 (FRA)What you’ll receive if you wait until age 70
 
6270%$1,050 (.70 x 1,500)$450 more$810 more
6375%$1,125 (.75 x 1,500)$375 more$735 more
6480%$1,200 (.80 x 1,500)$300 more$660 more
6586.7%$1,300.50 (.867 x 1,500)$199.50 more$559.50 more
6693.3%$1,399.50 (.933 x 1,500)$100.50 more$460.50 more
67 (FRA)100%$1,500 (1.00 x 1,500)NA$360 more
68108%$1,620 (1.08 x 1,500)NA$240 more
69116%$1,740 (1.16 x 1,500)NA$120 more
70124%$1,860 (1.24 x 1,500)NANA

“According to the Social Security Administration, almost 75% of the retirees who receive benefits take reduced payments because they filed before reaching FRA, said Colleen Jaconetti, a senior investment strategist in Vanguard Investment Strategy Group. “Delaying your benefits until age 70 is a relatively simple way to maximize your benefit. And if you continue to work between ages 62 and 70 and earn more than ever before, the amount used to calculate your lifetime earnings will increase—potentially increasing the benefit you’re eligible to receive when you decide to collect benefits.”


Options for couples (and former couples too)

Being considerate is key to a happy marriage, and the same holds true for taking Social Security benefits.

“You shouldn’t come up with your retirement strategy in a vacuum—the best approach for a particular couple depends on a number of factors, including relative earnings history, age difference, longevity expectations, and spending needs,” said Jonathan Kahler, an investment analyst in Vanguard Investment Strategy Group. “We have resources that can take some of the mystery out of Social Security, but working with a financial advisor who understands your personal situation can be really beneficial.

Each individual is eligible to receive Social Security benefits based on his or her own earnings history, but a spouse may also be entitled to spousal benefits—and the time at which one spouse begins taking benefits could impact the amount of survivor benefits the other person is eligible to receive.

“Married couples should consider delaying whoever’s benefit is larger to maximize survivor benefits and hedge against longevity risks,” said Kahler. “It’s also worth noting that if you’re divorced—but your marriage lasted ten years or longer—you may still be eligible for spousal benefits. Even if you’re divorced and your former spouse dies, you may be entitled to receive survivor benefits.”


Time is money

Social Security is a retirement program that was created for (and funded by) U.S. workers. Currently, there are about 40 million workers who receive benefits. Be among the workers who receive the most benefits.

“With some planning and strategic thought around how you plan to live in retirement, you can feel confident that you’re getting everything you’re entitled to,” said Jaconetti.

Note:
All investing is subject to risk, including the possible loss of the money you invest.