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WHEN I CLAIMED SOCIAL Security benefits, I had no idea how much there was to know—and how much I didn’t know. Bear in mind that the Social Security website didn’t exist until the late 1990s, and back then only minimal services were accessible through the site. In addition, most people didn’t fully appreciate the advantages of delaying benefits.
In my naïveté, I thought I would go to my local Social Security office to find out what options were available for claiming, and what the optimum time would be for me to begin benefits based on my earnings and marital status. Surely they would help me make the best decision? After all, they were the experts.
Big mistake.
I had no intention of signing up at age 62 but found my arm being twisted, ever so gently, to do just that. Now, I’m not beating up on the Social Security agents. They’re usually polite and congenial, but they vary in knowledge and experience, and sometimes lead you to a decision that may not be in your best interest. Lesson learned: If we feel uneasy about a financial decision, it’s usually a sign that we need to do more research.
Later, as the time was drawing near for my husband to file for his benefits, I made an unrelenting, in-depth study of the ins and outs of Social Security claiming so that he might avoid my error. My efforts paid off in 2007 when I read an article in The Wall Street Journal by Glenn Ruffenach, titled “The Baby Boomer’s Guide to Social Security.”
The article neatly outlined an option for married couples, whereby at full retirement age, one spouse—my husband, in this case—could employ the file-and-suspend option. This meant he could collect spousal benefits while earning additional retirement credits until he reached age 70, at which time he could start his own benefits based on his own earnings record. His spousal benefit would be equal to 50% of my benefit as of my full retirement age, though I ended up with less than my full retirement age benefit because I had claimed at 62.
When my husband attempted to pursue this claiming strategy at our local Social Security office, we were told by the staff that they weren’t aware of it. This time, however, I asked them to call Social Security headquarters in Baltimore to confirm our information. We were then referred to a more experienced agent.
In the interest of brevity, I won’t go into all the headwinds we encountered. But in the end, the application was processed and it all worked out well for us, but not without some serious agita. Unfortunately, others can no longer follow our example because the window on file and suspend has been closed since April 2016. Still, for us, the strategy served to take the sting out of my earlier claiming mistake.
Today, there’s much more information on Social Security available, as well as a variety of calculators that will help you sort out your claiming options. You can also create an online account with Social Security, even if you’re still years away from claiming, and get information on your likely monthly benefit.
If you can afford to and you’re in good health, try to avoid anything that would reduce your maximum benefit. It’s said that too many people underestimate their longevity. To get a handle on how long you might live, head to LongevityIllustrator.org.
After claiming, if you feel you may have made the wrong choice, you can apply to Social Security for a re-do if you’re within a year of your application’s approval. You do have to repay all money you’ve received from Social Security and, if you’ve paid taxes on the income, you’d need to file an amended return to get that money back.
An interesting footnote: In January 1940, the first monthly retirement check was issued to Ida May Fuller, a legal secretary, in the amount of $22.54. She retired in November 1939. The accumulated taxes on her salary, during the three years she paid into the Social Security program, came to $24.75. Fuller started collecting benefits at age 65 and lived to be 100. During her lifetime she collected a total of $22,888.92 in benefits.
Marjorie Kondrack loves music, dancing and the arts, and is a former amateur ice dancer accredited by the United States Figure Skating Association. In retirement, she worked for eight years as a tax preparer for the IRS’s VITA and TCE programs. Check out Marjorie’s earlier articles.Want to receive our weekly newsletter? Sign up now. How about our daily alert about the site's latest posts? Join the list.
I appreciated the article’s good advice to be cautious about information provided by Social Security staff. My experience with Social Security when enrolling in both SS and Medicare could not have been better but I’d also done a lot of research (especially Mike Piper’s book) and didn’t need any advice. So – the contrarian view: The author believes it was a mistake for her to claim SS earlier than FRA and of course that may have been true for her specific circumstances. But – a blanket statement that this is always, or even generally, a mistake for the lower earning spouse is just wrong. Mike Piper in both his book and his excellent calculator makes the point that usually a couple’s claiming decision is best made on joint life expectancy. The surviving spouse will receive the higher of the two benefits. Again depending upon the couple’s circumstances the higher lifetime aggregate benefit decision is often for the lower earning spouse to claim earlier than FRA. Piper’s calculator demonstrates this. So – this is no more than a quibble but earlier is not always a mistake.
your points are well taken Keith. In my case I went to SS office to review my options totally unaware of all of the above— depending on the agent’s knowledge. I do believe that File and Suspend is what saved the day for us. And, as stated, it all worked out well for us, in accordance with our circumstances.
Thanks for your sharing your knowledge.
I recently read an article that said you should claim SS at your FRA (full retirement age). According to this article waiting until 70 offered no real advantage. Others will argue against that, saying if you live longer your benefits will be more. But they also provided calculations that includes the 3+ years of missed payments if you wait, and the opportunity costs of that.
Boomer…you should do whatever you believe will be the right claiming choice for you. There’s now a lot of information on the Social Security site—ssa.gov. I would start there.
Everyone’s situation is different. There is no right or wrong choice.
Thanks for commenting.
We had a terrible experience with our local social security office as they insisted that my husband, a state employee, would receive reduced benefits due to the government pension offset. This applies to employees that work in government jobs that don’t pay into social security. My husband has never had such a job (he has always paid social security on his earnings) and that was obvious from his earnings report that was right in front of the agent on her computer screen. At one point we were shouting and she called the security guard over. We left and I called social security, got a very competent person on the phone who set everything up correctly.
Dominique..so unfortunate you had a bad experience but glad it got straightened out.
some agents are more knowledgeable and helpful than others.
Thanks for reading and sharing.
I lucked out with a visit to the local SS office a year or so before I retired at 64. The employee did a thorough job of explaining my choices and gave me a printout of estimates as to what I would receive if I waited until certain ages. This provided me a clear view of what I could expect. Because I had been without a full-time job for 18 months followed by several years in the only position I could find but paid what I had made in my late 30s, it wasn’t going to make a huge difference if I waited longer. Combined with an early retirement incentive because of Covid and my own fear of contracting it, it made sense to do it. It also was a job that had nothing to do with my skills or education.
Ronald…you Made the best decision for yourself
and it was good of your employer to explain your choices and print out information for you.
Thank you for sharing your experience..
Two days ago I finished what should be my last significant interaction with the Social Security claiming process: my age-70 retirement claim was completed.
As a couple we have made some good and some not so good Social Security decisions. Years ago when my spouse was already casually retired and turned 62 we activated her benefit knowing that mine would be more than twice of that and thought that she would switch to a spousal claim when I filed. What we missed was that a spousal benefit was 50% of the other spouses FRA benefit, not 50% of the wait-to-70 benefit. As it turns out her age-62 benefit is slightly more than my 50% of my FRA benefit.
But we were able to take advantage of the restricted application for spousal benefit (no longer available) when I hit my FRA. About 5 months after my FRA there was a lot of news about the last-call for using the restricted application which prompted me to file for it. The amount was larger than expected since the spousal benefit is always calculated using 50% of the other spouses FRA benefit, not the actual benefit amount. While the benefit was not a lot of money it did help us maximize our retirement contributions while I continued to work.
Now, 4 years later, I applied online for my full retirement benefit a full two months before I turned 70. The SS web site says that most applications are completed in 2 to 4 weeks. After waiting 2 months I called the 800 number and after a long time listening to (intentionally?) painfully distorted music I spoke with a pleasantly chatty representative who could not do anything about moving the application along but who did give me the phone number of the office that was assigned to process the application and last name of the person responsible. A few days later I called the office number and was able to connect to the assigned representative. She was also pleasantly chatty. She chuckled when I mentioned the 2 to 4 weeks and explained that there is such a large backlog that waiting more than 60 days is typical. But since I had called she would go ahead and process my application while I waited. It took about 10 minutes. The only item the system would not allow her to do is the voluntary withholding I requested. I ended up faxing the W-4V form for that to my local SS office.
My final age-70 benefit is almost exactly what was estimated using the anypia32 software downloaded from https://www.ssa.gov/oact/anypia/anypia.html. I had some paranoia-driven concerns that SS would “forget” about the restricted application strategy. For the last 4 years my status when I logged into my SS account was only that I was already receiving retirement benefits.
I am continuing to work full time and committed with my employer to at least the end of this year. This means that 85% of my benefit will be taxed. But is nice to know that if/when I do stop working that our combined SS benefits will cover all of our modest necessary expenses and that our retirement savings will be for the fun stuff.
Humble Reader…sounds like you made all the right moves and at least your wife will get the full amount of your benefit should you pre-decease her. Well done. Thank you for your comment.
I have benefited greatly by all the information we now have on social security claiming decisions! Because of my age, I am no doubt one of the last group of people to be able to take advantage of the restricted application option, to claim on my ex-spouse’s record while delaying my own. I do remember that an agent I dealt with tried to talk me out of that, and wanted me to claim my own at that point, saying I would get more in the long run. I had already run the numbers, and had my daughter run them separately as a sanity check, so I did the restricted application. I’m very grateful for all the good advice out there now, as opposed to when Marjorie retired!
Carol – So glad you were able to use the restricted application option and that all the information out there today proved to be of help to you. Thanks for your input.
As a former federal employee who worked under the old Civil Service Retirement System I can caution to take everything you hear in a Social Security Office with a grain of salt.Those who were covered by the CSRS did not pay into Social Security and are generally not eligible to claim. But there are circumstances that allow it and many times I was given incorrect info about my benefits. Caution and take time to educate yourself on the Windfall Elimination Provision and the Government Pension Offset if you fall into this group
Thank you for your comments, George, and for the benefit of your experience. Caution and Education are the key words here.
Marjorie – It’s so nice to see you used the “File and Suspend” strategy which I created and named back in 2003. Glenn Ruffenach’s article you cite was a thrill for me as I was (and still am) just an average Joe trying to pay the bills. I did think I had a good idea at the time. Here’s a little background if you are interested. Incidentally, now we have Social Security claiming software such as Mike Piper’s and the William Meyer/Bill Reichenstein tool that was sold to T. Rowe Price this week. But back then, nearly everyone in the financial planning community touted taking Social Security as soon as you retire or age 62 if earlier… and that one should delay taking IRA withdrawals. Jonathan was one of the few to clammer that one should delay SS and that the survivor benefit was one big reason. I started running the numbers and was sold on the higher earner delaying SS if they had IRA assets to bridge until a later claiming age. I dug into the weeds of SS rules and found that President Clinton had signed legislation in 2000 that was meant to encourage older workers to keep working as it eliminated the earnings test past Full Retirement Age. When I read it, two things stood out. One: An individual could suspend benefits once they filed if they had reached Full Retirement Age. Two: Any suspension would not affect the eligibility of others to collect on that individual’s record. Hence it seemed one could file for benefits at FRA and immediately suspend them. This would trigger the spouse to become “entitled” and this was a good thing because 1) the spousal benefit doesn’t earn Delayed Retirement Credits and 2) this lessons the pain of delaying the other spouse’s SS as SS income is coming into the household and 3) this would further encourage the higher earning spouse to delay and thus create a future (higher) survivor benefit. Jonathan wrote about it in 2006 and word started spreading. As per your experience, I received many emails that local SSA offices didn’t allow it but when I provided the POMs references, it worked. Of course, the strategy was deemed a loophole in 2015. That said, if it encouraged households to delay one spouse’s SS, that’s a positive and future widows/widowers will benefit. Financial planners and finance journalists look at SS differently these days. My book “How to Craft a Resilient Retirement Income Plan” was self-published on Amazon a couple of months ago and is available for $8 if any fellow retirement income geeks would like to dive in deeper.
James – Thank you for your very interesting comments and good luck with your book. The potential danger of limiting your income stream later on by taking Social Security early is that it could lead to a financial shortfall later in life. File and Suspend was a big boost for us.
An excellent claiming strategy calculator by Michael Piper:
opensocialsecurity.com
https://opensocialsecurity.com/
This extremely useful SS Calculator was provided by one of this site’s fine contributors. Do I really need much more info if my wife and I are in good health?
https://opensocialsecurity.com/
Although our claiming experiences did not go smoothly, we can all be glad for Social Security. Without it the elderly poor and disabled would be without resources and welfare rolls would. Increase significantly.
it not only insures lifetime benefits to retirees but also provides benefits to families whose breadwinner dies.
I’m hopeful calm heads will convene to shore up Social Security finances.
I’m surprised you got any advice from anyone at the Social Security office on when to claim. They are absolutely prohibited from giving any kind of advice under any circumstances. Perhaps that wasn’t the case in the past.
Steve…perhaps advice is not the proper word, but I was definitely steered in that direction. Things have changed a lot since I applied. Prior to 2005 50% of all claimants chose to claim at 62. That percentage has greatly decreased since then.
Thanks for your comments.
For me the social security books and public commentary of Professor Laurence J. Kotlikoff and Mike Piper, CPA are must reading before making your own informed social security claiming decisions. The jointly authored book Get What’s Yours: The Secrets to Maxing Out Your Social Security by Kotlikoff, Moeller and Solman was my initial deep read regarding social security claiming that resulted in what I consider my informed SS claiming decision. While my decision was to wait until age 70 to claim, the claiming decision is unique to each of us.
For a retired SSA representative perspective Tom Margenau has been writing a social security column through ArcaMax for years titled Social Security and You and also has some short SS books out. My reading of Mr. Margenau’s commentary and view will frequently conclude that the job of the social security representative is to provide you factual information regarding the social security program, not to be your financial planner.
If you like to watch videos about social security, and who doesn’t, the YouTube channels of Devin Carroll and Rob Berger may and be entertaining and helpful. Rob does not appear to be selling you anything and if you like Humble Dollar I expect you will enjoy Rob Berger.
HD writer Adam Grossman and his blog at Mayport – https://www.mayport.com/category/social-security/ is a also great starting point for your SS claiming decision journey. I suggest reading before age 62 and certainly before claiming social security.
Bottom line for me – everyone should spend more time planning their retirement finances, including and especially about social security claiming.
Mr. Perry..thank you for your thoughtful reply and all the information. I do especially like Adam Grossman’s perspectives.
Mike Piper’s book, Social Security Made Simple, does a great job of explaining benefits and options.
Thank you Harold. I did read Piper’s book, Henry”Bud” Hebelers book and Kotlikoff’s book
and many articles by Jonathan Clements, Glenn Ruffenach and Kelly Greene, formerly of the Wall Street Journal. Thank goodness for brilliant minds who can explain complex matters in terms we can understand.
Too bad I didn’t have all this knowledge when I applied.
Just as I recommend reading “Medicare for Dummies”, I recommend reading “Social Security for Dummies”. I view SS as the only fully COLA protected annuity going, and therefore waited until 70 to claim to get the maximum basis for future increases. This was an easier decision than it might have been as I was able to claim a spousal benefit at FRA against my ex-husband’s account. (Good thing I didn’t leave him a year earlier – you need to have been married for at least ten years.)
It’s infuriating that you got such bad advice!
Kathy..you are one smart cookie. Many divorced people don’t realize they can claim benefits on their ex-husbands account as long as they were married 10 years.
And as for not only being given bad advice, the agent pressured me to make a decision saying he had another appointment to consider.
Thank you for your input and for reading.
Thanks Marjorie, those books really help. That is doubly infuriating if he pressured you. I was luckier, I visited the local SS office at FRA and at 70, and both times met with women who seemed knowledgeable and unhurried. However, I believe now most business is conducted by phone.
I’ve heard stories from people preparing to retire at work. They often say to give yourself plenty of time to get benefits processed as it can get complicated and expect headwinds as you described.
One poor guy at work retired last year and I heard he still hasn’t collected one payment due to a complication from a divorce decades ago. Good thing he didn’t need that money to buy food or pay for the lights.
Juan..it is a shame what some people have to go through when applying for benefits when they are now giving social security benefits to illegals “under certain circumstances “. Yes, that’s right.
Thanks for commenting.
Majorie, the problem with SS – one of them – is that nearly everyone is like Ida May collecting far more in benefits than paid in taxes. I have been collecting for 14 years, but about eight years after my first check I had received in benefits all that I and my employers had paid in taxes.
Part of the confusion about starting benefits is the way it is presented whereby people think they are adding more by waiting. The correct way to view it is that normal retirement is age 70 so each month beginning before that is a reduction in benefits. Any age is the actuarial equivalent of all other ages.
I wasn’t around at the time, but it is my understanding that SS has always been based on the idea that current workers support current retirees. How much you paid in SS taxes is not related to how much you are entitled to in benefits, those funds went to support former retirees.
Dick..your last statement stumped me a little..
isn’t actuarial equivalent a term used by insurance companies to compare policies?
All I know is that as a married couple we made a good choice and one that benefits a spouse to the best advantage as I’ll be able to claim a much larger benefit if my husband passes before me. Had I been single I’d be stuck for life with a much lower benefit because of lower earnings, and not having better information.
Thanks for reading and commenting Dick.
Happy Easter. Marjorie
At one point, for a single person, Social Security was actuarially equivalent, meaning that — if you lived to an average life expectancy — you’d do equally well, no matter when you claimed. But as you suggest, that’s not true once you factor in survivor benefits for a spouse. On top of that, life expectancy has climbed faster than the full Social Security retirement age, which means benefits are no longer actuarially equivalent and those who claim early are, on average, missing out. On top of that, for those who have taken reasonable care of themselves, average life expectancies are a bad guide. For instance, in pricing immediate fixed annuities, insurers know they’re typically selling to folks who have regularly seen a doctor and avoided a life of junk food, and they assume buyers will live four or five years longer than average.
I just read a study that said while the percentages of reduction are equivalent, because higher income people live longer than average the adjustments are slightly off for retirees in that category.
Jonathan..thank you for clarification. I agree about life expectancies.
we took a chance since my husband had heart surgery prior to claiming but he’s still here at age 81.
It simply means that no matter when you start to collect, the total value will be the same – lower benefit more years collecting and the opposite. Wait until 70, receive more per month, but for fewer total months.
Happy Easter
Dick..thank you. I also understand what you said in your first paragraph in first comment about collecting more than you contributed, but many people die before they collect a cent. The government giveth but also claws back as much as possible. 85% of our social security benefits are taxed.
Actually less than 5% who pay don’t live to collect according to SS and then in some cases survivors do. More collect without paying a penny in taxes.