Early Decision

James McGlynn

DELAYING SOCIAL Security until age 70 will get you the largest possible monthly benefit, and that’s the right strategy for many retirees. But what’s right for many folks won’t necessarily be right for you—and you may want to file at 62, the youngest possible age, so you maximize your total lifetime benefit.

If you’re single with no dependents, you should probably file at age 62 if you’re in poor health or your family doesn’t have great genes, and you don’t expect to live to age 80. Over this relatively short period, the smaller monthly benefit starting at age 62 will likely prove more valuable than waiting to get a larger monthly check. Similarly, if you’re single and have no other income to live on, by all means start Social Security at 62. In both instances—poor health or no other income—beginning at 62 should be the right decision, provided you don’t live into your 80s.

If you’re widowed, there may also be good reason to begin Social Security at age 62. Survivor benefits can typically start at age 60 and won’t get any larger if you delay beyond your full Social Security retirement age, which will be 66 or 67, depending on the year you were born. In some instances, a widow or widower might start her or his own benefit at age 62 and then switch over to survivor benefits at full retirement age, assuming the survivor benefit is bigger. Alternatively, those who are widowed might start survivor benefits at age 60 and then claim their own benefit—based on their own earnings history—at age 70, at which point it’ll be at its largest, thanks to the delay.

Whether you’re married or not, if you have dependents, you might be eligible for Social Security family benefits, on top of your own benefit. If you have dependent children under age 19, they might be able to collect 50% of your full retirement age benefit. The maximum total Social Security benefit is 180% of the parent’s full retirement age benefit.

I met a 62-year-old man who bragged to me about his 10-year-old twins—and how he could collect Social Security benefits for them. If you have adult disabled dependent children, you may also be eligible for family benefits, assuming the disability happened before age 22. In many cases, when there are dependent children or adult disabled children, filing at age 62 will maximize benefits.

A married couple might also decide to start Social Security benefits at age 62 as part of a strategy to maximize survivor benefits or to trigger spousal benefits. If both of the filers are in poor health—again, meaning not expected to reach age 80—then they should probably both file at age 62. If one of the couple is in poor health and the other is healthy, then the person with the smaller benefit should file at age 62 and the other should file at age 70, because—upon the death of the first spouse—the lower benefit disappears.

Another possibility: If one spouse was born before 1954 and the other, younger spouse has turned age 62, the younger spouse might file for benefits. That’ll allow the older spouse to file a restricted application for spousal benefits only. At age 70, the older spouse could then file for his or her own benefit. Note that this loophole, which has now been closed for most folks, remains open only for those born before 1954.

If the lower-earning spouse is much older than the higher-earning spouse, sometimes the higher-earning spouse will want to file at age 62. Until he or she files, the lower-earning spouse can’t receive spousal benefits. Let’s say the higher earner is eight years younger. If he or she waits until age 70 to claim benefits, the other spouse won’t receive spousal benefits until age 78.

Keep in mind two things about filing at age 62. First, if you’re still working and collecting Social Security benefits, there’s something called the earnings test that will reduce your benefit if your income exceeds $18,240 in 2020. Your benefit is reduced $1 for every $2 in excess of this amount. Once you reach your full retirement age, your benefit is adjusted upward for the benefits lost as a result of the earnings test.

Second, there’s a filing trick that few are aware of. If you file for benefits at age 62—or, indeed, at any age below your full Social Security retirement age—you’re able to suspend benefits at your full retirement age and then receive “delayed retirement credits” up to age 70. Perhaps you filed early to trigger dependent benefits for a few years, but now those dependents are no longer eligible because they’re too old. In that case, at your full retirement age, you might want to suspend your benefit until age 70 and collect the annual benefits increase of eight percentage points.

My general recommendation: Create your own online Social Security account. You can then run the calculations for your situation. The bottom line: Delaying until age 70 is often the right decision—but not always.

James McGlynn, CFA, RICP, is chief executive of Next Quarter Century LLC in Fort Worth, Texas, a firm focused on helping clients make smarter decisions about long-term-care insurance, Social Security and other retirement planning issues. He was a mutual fund manager for 30 years. James is the author of Retirement Planning Tips for Baby Boomers. His previous articles include Your 10-Year RewardFour Simple Tips and Filling the Gap.

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