Thirteen years ago, I blew it. I took my Social Security at full retirement age, and by doing so my wife and I lost $250,000 of lifetime Social Security benefits. Not only that, but instead of getting $3,400 a month when I die, she will get only $2,600. The good news is that she has forgiven me and next year we will celebrate our 57th anniversary.
New Ways to Optimize Benefits
Recent advances in technology have allowed us to optimize Social Security benefits, and we no longer have to depend on the old yellow-pad method of calculating. Compare my situation with that of Charlene and Mike, who came to us asking if they should do what another advisor told them to do—take their benefits early. I was able to run their situation through our optimizer and determined that if Mike waited seven years before taking his benefits by “filing and suspending,” Charlene could take 50% of his benefit along the way, which would increase their overall benefits by $275,000 over their lifetimes.
Deciding when to take your benefits is more complex than ever. People used to choose one of three options: take them early, take them at full retirement age or defer them until age 70½. These days, strategies such as “file and suspend” or “file for restricted benefits” can increase your total benefit.
Three Questions to Ask Your Advisor
Choosing the best Social Security strategy requires very specific technical knowledge, and for most people, we suggest speaking to an advisor. Here are three questions that I would suggest asking your advisor:
- What are my options for Social Security? (If they just list the three I mentioned above, run.)
- Is it better in my situation to maximize the survivor benefits or my personal benefits? How does the strategy I am choosing accomplish that?
- If I choose to defer my Social Security benefits, how long do I have to live to break even?
