With thousands of baby boomers reaching retirement age each day, tens of millions of people will be signing up to receive their Social Security benefits over the coming few years. Until President Reagan worked out a deal with Congress to raise the retirement age gradually, many of us expected that Social Security would be bankrupt long before we reached retirement age. The good news is that the system is solvent for at least another decade but it will need another, perhaps similar, fix to keep full benefits going through retirement for boomers and gen Xers.
What many don't know, however, is that maximizing your Social Security benefits takes some planning. Most know that delaying benefits until age 66 (so called Full Retirement Age for most boomers) is good and delaying until age 70 is even better. While that is generally true, the situation can get quite complex and confusing for two earner couples, divorced individuals, couples with substantial age differences and even those couples who have uneven employment records.
As more of our clients are approaching their full retirement age, we decided to dig deeper into this subject and, quite honestly, we were surprised by what we found. While the simple rules of thumb do apply, they may not maximize benefits, depending on the specific situation. And, not surprisingly, the helpful folks at the Social Security Administration may not be able to provide you the best answers. Perhaps more importantly, they likely won't know if you are asking the wrong questions for your situation.
In addition to lots of reading on this topic, we have purchased software that allows us to help clients determine the optimal claiming strategy for their specific situations. You might think: how much difference can this make? The answer is: quite a lot. For example, one change to the simple "defer until 70" strategy for a two career couple could net them an incremental $50k in benefits!
This is the type of service we provide to our wealth management clients as part of helping them live the best life possible with the resources they have available.