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Claiming Social Security Benefits: Think Before You Point

It was October 15, 2007, and the cameras were rolling. At a media event hosted by the Social Security Administration, Kathleen Casey-Kirschling applied online for her retirement benefits. Born January 1, 1946 at 12:01 a.m., she was officially America’s first Baby Boomer to file for Social Security.

Casey-Kirschling merrily pointed and clicked her way through the online application, saying: “It’s so easy! You can do this from home.”

And so launched the “silver tsunami” of retiring Baby Boomers filing for benefits at a clip of more than 10,000 per day for the next two decades.

Ms. Casey-Kirschling was 62 years old when she claimed. While this is the age Americans with a sufficient work history become eligible for retirement benefits from Social Security, by not waiting until she reached her full retirement age (FRA) of 66 her benefit was reduced about 25%. If she had waited an additional four years till age 70, her benefit would be about 60% higher than what she got at age 62.

As her hyphenated last name suggests, Kathleen was married. That fact alone opens up all sorts of possibilities for coordinating her claim with her spouse, to give her more in benefits than what she would receive based solely on her own work record. Figuring out which spousal claiming strategy makes the most financial sense can bring in upward of tens of thousands of additional dollars over retirement.

Smart Vs. Not-So-Smart Ways To Take Social Security

In all fairness, Ms. Casey-Kirschling may have been completely aware of what resulted in a penalty for taking benefits before full retirement age, and perhaps had done her homework on how she could coordinate her benefits with her husband’s. The reality, however, is that most Americans do not know that there are smart and not-so-smart ways to take Social Security. Too many believe that it’s best to take the money at the first opportunity and run.

Here are some tips if you are weighing when to claim your benefits:

  • Think twice before claiming at age 62. Make sure you have done some financial planning to account for your health, family longevity and other resources before automatically signing up the minute you are eligible.

  • If you are married, be aware that for married couples coordinating their claims can increase combined benefits. One spouse may want to claim at age 70, while the other spouse might want to claim his or her own benefit early. The “best” strategy depends on the difference between the spouses’ ages and the amount each spouse would collect on his or her own record, as well as the couple’s basic financial and health circumstances.

  • If you are single and divorced but were once married for at least 10 years, you still have the opportunity to make a claim based on your former spouse’s record.

  • If you are widowed, widowed and remarried after age 60, disabled, and/or have a disabled spouse, there are even more possible strategies for claiming benefits.

Before you point and click to get your Social Security retirement benefits, spend some time getting good advice about your options. Be aware that the Social Security Administration, while extremely helpful, efficient and high-tech, cannot give you advice about when and how to claim.

Better still is to work with a CFP® professional who can look at your whole financial picture, and has the expertise and specialized software to help you make a good decision. This could make all the difference between just getting by in retirement and truly enjoying life in your later years.

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