Savvy Senior: How to find guidance on the best time to claim Social Security

Dear Savvy Senior,

Can you point me to any online tools or services that can help near-retirees decide when to begin Social Security benefits? My wife and I are close to retirement and do not have much saved, so we want a strategy that will maximize our lifetime benefits.

— Need Some Help

Dear Need,

That is a very wise question. The age at which you start Social Security can have a major effect on your lifetime income, so it is worth comparing your choices before you apply.

Key factors

You may begin retirement benefits as early as 62, but starting before your full retirement age permanently lowers your monthly payment. For most people nearing retirement, full retirement age is 67. Claiming at 62 instead of 67 can reduce your benefit by roughly 30%. If you wait beyond full retirement age, your benefit grows by 8% for each full year you postpone filing, up to age 70.

Age is only one part of the decision. Health, family longevity, plans to keep working, taxes, and spousal or survivor benefits can all play a role.

For instance, if one spouse earned more than the other, delaying the higher earner’s claim can raise the survivor benefit the other spouse may eventually receive. That can matter a great deal for married couples.

It is also helpful to know that Social Security representatives can explain the rules and show how benefits are calculated, but they usually will not tell you when to file. That choice depends on your personal circumstances.

Gather information

A good place to begin is ssa.gov/myaccount, where you can get your personalized Social Security statement. It estimates retirement benefits at different claiming ages using your actual earnings record.

You should also think about how long you may need the income. A basic estimate is available at ssa.gov/oact/population/longevity.html. For a more detailed projection, try livingto100.com. Estimating your life expectancy can help you weigh the trade-off between starting sooner for cash flow and waiting for larger monthly checks.

It is also important to review your other retirement income sources, including pensions, savings, and part-time work. Those resources can affect how much you need from Social Security in the early years of retirement.

Online calculators

After you have your benefit estimates and a rough idea of how long you may need the money, online calculators can help you compare claiming strategies.

Open Social Security at opensocialsecurity.com is a free tool that compares different claiming ages and estimates which option may deliver the most total spendable dollars over time.

If you want a more detailed analysis, Maximize My Social Security at maximizemysocialsecurity.com costs $49 for one year. It allows you to run what-if scenarios for married couples, divorced or widowed people, including cases where one spouse files while the other keeps working.

Professional help

If you would rather get advice in person, consider a fee-only CFP professional with experience in Social Security claiming strategies. Such a planner can help you compare filing ages and coordinate Social Security with other retirement income.

You can find fee-only planners through the National Association of Personal Financial Advisors at napfa.org. A planner may be especially useful if you are divorced, widowed, or have other complicated circumstances that could affect your benefits. Be sure to ask about fees before you hire anyone.

Taking time to review your options now can help you make a more informed choice about when to claim. And if you decide to delay your Social Security benefits, remember that you generally still need to handle Medicare at 65.

Send your questions or comments to [email protected], or to Savvy Senior, P.O. Box 5443, Norman, OK 73070.