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Quick question: what is your strategy for when to start receiving Social Security?

If you haven’t thought about that before, you’re not alone. While most people know that they will be receiving Social Security payments in retirement, very few think of it as a decision that one does much planning for. However, married couples can often receive more money if they have a plan in place.

Recently, we’ve been working with BlackRock (see linked pdf, below) on a way to paint a picture for our clients on the best time to start receiving Social Security. As an example, let’s assume that each spouse can receive the following payments*:

  • Husband: $1,500 per month
  • Wife: $1,000 per month

Social Security Estimation

If each spouse starts Social Security at age 67, the total payments received would be $1,044,016. If both wait until age 70, the total increases to $1,168,884. That makes sense, since you get a raise if you delay your start date until age 70.

However, another option is available. If the wife starts at age 62, her husband can take what is known as “spousal benefits” on his 67th birthday, which is equal to half of his wife’s $1,000 payment. He can collect that until he turns 70, at which point he would start to receive his own $1,860 monthly payment. By doing this, the total payments received would be just under $1,100,000. While this is about $70,000 less than if both spouses wait until age 70, there is a big difference in cash flow; the husband receives an extra 3 years of payments, while the wife receives an extra 8 years. If a couple wants to maximize the cash it receives yet is unable to wait until each spouse is 70, this is a great solution.

Figuring out the best time to start receiving Social Security can make you tens of thousands of dollars. If this is something you would be interested in taking a look at, please let us know and we will get in touch. We would also be happy to speak with any friends or family members that have Social Security-related questions as well.

* Payments are assumed to grow at a rate of 2% a year and each individual is expected to live until age 90.