Filing: There’s nothing particularly special about 70
I wrote a recent column in which I pointed out that waiting until 70 to start your Social Security, which is the mantra of almost everyone who is trying to “maximize” their retirement benefit, is not always the smartest move. But still many people insist on waiting until then to draw their first check. Today’s questions are from these folks.
Q: I have been planning to wait until 70 to start my Social Security. I will be 70 on Nov. 7, 2022. I want to make sure I get the maximum Social Security benefit. I’m afraid that if I indicate November as my starting month, they will think I mean the October check that comes in November. And then because I will still be 69 in October, I will get the age 69 benefit rate instead of the age 70 rate that I’ve waited so long to get. Please help me.
A: If you want your benefits to start at age 70, then you will indicate November (the month you turn 70) as your starting month for Social Security benefits. It’s as simple as that.
But if through some kind of fluke, they accidentally use October as your starting month — well, it’s really no big deal and nothing to lose any sleep over. In that case, you would not get the age 69 benefit rate. You would get the benefit rate payable to people who started their Social Security at age 69 and 11 months. And that would be two-thirds of 1% less than your age 70 benefit rate.
So, your ongoing benefit rate would be a couple dollars less than it would have been had you started your benefits at age 70. But on the other hand, you would end up with one extra Social Security check. In other words, for the next dozen years or so, you’d be ahead if your benefits started at age 69 and 11 months.
Q: My wife and I are both turning 67. Everything we hear and read tells us that we should wait until 70 to start our Social Security. But we don’t know what to do. We are so torn.
We have about $4 million in investment funds, but we want to make sure we get the biggest re
turn on our Social Security investment.
A: As I always point out in this column, I am not a financial planner. I’m just a retired Social Security guy. So, all I can really do is explain Social Security rules to you.
If I had $4 million available to me, I wouldn’t be losing sleep over my Social Security decision. It’s not like you are between a rock and a hard place when it comes to Social Security. You are going to be just fine no matter when you choose to start your benefits.
To repeat, that advice is coming from a guy who is not a financial planner. But if you want some financial planning insight, see the answer to the next question.
Q: Half my colleagues tell me I should wait until 70 to start my benefits. The others tell me to take benefits now. (I’m 67.) I just don’t know what to do.
A: For every planner who writes to tell me that I should always advise readers to wait until age 70 to file for benefits, another financial adviser tells me that there is research that shows the best course of action is to take benefits at full retirement age.
So, there really is no clear consensus. I hear from people all the time (usually widows) who say their husband insisted on waiting until 70 to file for benefits. And then he died not too long after age 70, meaning that waiting that long was a mistake. On the other hand, I also hear from people now in their 90s who took benefits at age 62 who tell me they wish they had waited until a later age to start their Social Security. So, the bottom line is this: no one ever really knows. Obviously, each person just needs to look at a variety of issues when making that decision — things like health status, life expectancy, other income, taxes, potential benefits to widow(er)s, etc.