Outline:
Our group of skilled reporters brings together over a century’s worth of experience in crafting such articles. Support our ongoing efforts to create acclaimed content by clicking thefollow button above.
Choosing the right time to start receiving Social Security benefits can be one of the most complex parts of retirement, yet it’s also among the most significant decisions.
The timing of when you begin receiving benefits can significantly impact the total amount you receive throughout your life. Delaying your claim can increase your retirement income by tens of thousands of dollars over time, although it may not be suitable for everyone.
Gene L. intends to delay claiming his benefits until he turns 70. A subscriber of the Money Talks Newsletter is aware that waiting until age 70 would result in the highest monthly payment. However, he is uncertain if this decision might lead to unexpected outcomes or impact his spouse’s benefit amount.
As Gene recently inquired to Money Talks News:
Subscribe to Money Talks News emails every day and make sure to read them. There’s a lot of valuable information and I’ve utilized many of them.
I’ve been seeking some guidance on applying for Social Security and haven’t come across anything exactly what I’m looking for. I was wondering if you could offer assistance.
My spouse and I are 62 years old and planning to retire at 67. We are financially stable and belong to the middle class, but my intention was to start receiving Social Security at 70 to maximize the benefits. I thought we could rely on her Social Security income until I turn 70, with her starting to receive her benefits at 67. Both of us have more than 40 years of work experience. We own our home and vehicles outright.
Is there an issue with me waiting three years before applying for Social Security, even if I don’t take a part-time job? Could she receive my higher benefit amount until I begin collecting it? Would my three-year delay impact the amount I end up receiving?
Gene, I’ll address your questions one by one, beginning with those related to your benefits.
Is there an issue with waiting three years after retiring to apply for Social Security benefits?
From a technical standpoint, there is no issue with waiting three years following your retirement date before beginning to receive Social Security benefits. Indeed, delaying the claim until age 70 can be advantageous for many individuals, as it results in the highest possible monthly payment for the remainder of their lifetime.
The real issue is whether you can afford to delay your benefits — meaning whether you’ll have enough money to last three years without a paycheck or Social Security income. Alternatively, if you choose to work part-time during retirement, the question becomes whether you can manage financially with just a part-time income for three years.
I’m unable to provide an answer without understanding the details of your financial situation. I suggest evaluating your financial requirements to see if you can afford to delay accessing your benefits.
Evaluate your monthly cash flow without considering your benefits. In other words, figure out how much income you anticipate receiving from other sources each month, and how much money you expect to spend each month during retirement. Will this income be sufficient to cover all your expenses, including any medical costs you may have?
As you’ve indicated, you and your partner have worked sufficiently to be eligible for Medicare health insurance once you reach 65. However, Medicaredoes not reimburse all healthcare expenses, and standard Medicare premiumstypically increase every year.
The average retiree householdspends more than $8,000 annually on medical expenses, with over $5,000 of that total being related to insurance.
Read Next:Need over $800 for the Holidays? Here Are 9 Methods to Earn It Before (and After) December 25th
Is delaying the claim of Social Security until age 70 impact your benefits?
Postponing your payment past your anticipated timefull retirement age— which is 67, as you mentioned — can boost your monthly benefit payment by as much as 8% each year. Therefore, delaying benefits until age 70 may lead to tens of thousands of dollars in extra Social Security income throughout the remainder of your life.
Nevertheless, your benefit amount will not rise if you delay past the age of 70. Put another way, delaying until 70 results in the highest monthly payment, but there is no benefit to waiting beyond that point.
You can determine precisely how much your benefit would be if you apply at any age between 62 and 70 by looking at your Social Security statement. It will also verify if you have sufficient credits to be eligible for Medicare at 65.
Create an online account on the official Social Security website toaccess your latest statement and other resources.
Can your partner receive a benefit based on your higher earnings?
Regarding your spouse, if she applies for benefits once she reaches her full retirement age—which, as you mentioned, is 67—she would be entitled to the higher of two possible amounts:
- Her pension (which is based on her ownearnings record)
- Her spousal benefit(which is based on your income history — it’s usually half of your full retirement benefit, meaning half of the amount you would get if you applied at age 67)
Keep in mind that if your spouse applies for benefits at full retirement age, she will need to apply for both amounts simultaneously. This is referred to as thedeemed filing rule.
The regulation applies to all individuals born after January 1, 1954, and is designed to ensure the applicant receives the higher of the two possible benefit amounts they qualify for. Therefore, when your spouse applies, the Social Security Administration will examine both eligible amounts and provide her with the higher one moving forward.
Regrettably, your wife cannot receive half of what you would get if you wait until age 70 to apply for benefits.
Spousal benefits can amount to no more than half of a spouse’sfull retirement amount. Once more, for your spouse, this would equal half the benefit amount you would get if you applied at 67.
About Ask Money Talks News
Money Talks News features a series called Ask Money Talks News, which is published by the company. Although the articles can be accessed for free, only subscribers to the Money Talks Newsletter have the option to submit questions.
Subscribe hereand keep track to get a chance to ask a question. In our newsletters, we regularly ask for questions and provide guidance on how to send them in.
We aren’t able to respond to each query we get, naturally, but we focus on questions that are relevant to the majority of our users. We also give priority to questions fromMoney Talks News members.
You may find solutions to previous inquiries on ourAsk Money Talks News page.
How astute investors multiply their retirement funds (Sponsored)
A study by Vanguard revealed that, on average, a hypothetical investment of $500,000 over 25 years would increase to $1.7 million if managed personally, but exceed $3.4 million if handled otherwise.collaborate with a financial advisorThat’s double!
If you have $100,000 in assets available for investment, you are eligible for a complimentary meeting with a verified financial advisor in your local area.
Learn more
Please thoroughly examine the methods outlined in the Vanguard white paper,Assigning Worth to Your Worth: Measuring Vanguard Advisor’s Alpha.