San Diego Union-Tribune (Sunday)
Timing Social Security benefits
Weigh life expectancy when making decision
Q: I’m deciding at what age I’ll claim Social Security benefits. How does my life expectancy factor in?
A: First, the basics: You can start getting benefits as early as age 62, but you'll receive up to 30% less in each check than if you wait until your full retirement age, which is 66 for those born from 1943 to 1954 and gradually rises to 67 for those born in 1960 or later. For each year after your full retirement age that you wait to start benefits until the age of 70, you'll get an 8% boost in delayed-retirement credits.
Social Security actuaries aim to set payouts so that if you die at the time your life expectancy projects, you'll receive about the same total amount of benefits no matter when you start claiming them. If you are single and have never been married, spousal and survivor benefits aren't a concern, so your decision about when to claim hinges on how long you think you'll live.
If you can afford to postpone taking benefits and are deciding whether to hold out to age 70, a key question is whether you expect to live past 80. Research shows that at about age 80, the cumulative amount you've received in benefits is approximately the same whether you started benefits at age 62, 70 or somewhere in between.
As a rule of thumb, “If you're single and believe that your life expectancy is less than 80, you should claim before 70. If you think you're going to live past 80, wait until 70,” said Bill Meyer, CEO of Social Security Solutions, which provides tools to help recipients determine when to claim benefits.
A person who is eligible to receive $2,000 a month at a full retirement age of 66 and lives to 95 would receive $198,000 more in total benefits if he or she waited to claim at age 70 instead of at 62.
You can enter your gender and birth date at www.ssa.gov/oact/population to get an estimate of how many more years you may live at your current age as well as at 62, your full retirement age and 70, if you haven't reached those ages yet. But you should also account for your health, your lifestyle and your parents' longevity (especially that of your mother) as you gauge your potential life span.
Lisa Gerstner is a contributing editor to Kiplinger's Personal Finance magazine. Send your questions and comments to moneypower@kiplinger.com. And for more on this and similar money topics, visit Kiplinger.com.