EagleTribune.com, North Andover, MA


July 6, 2014

Social Security tips for singles

The decision of when to start collecting Social Security benefits can have serious and lasting consequences for the financial security of individuals and their spouses. Despite the fact that a wrong decision as to when and how to take Social Security can cost retirees tens of thousands of dollars or more, most begin taking benefits at the earliest opportunity without evaluating their options. Simply put, retirees should choose the Social Security strategy that maximizes their lifetime benefits.

The decision criteria are different for single people than they are for married couples or divorced spouses. In this article, we will focus on Social Security benefit considerations for singles.

Workers who qualify for Social Security retirement benefits can elect to receive them at age 62, wait until full retirement age (between ages 66 and 67 depending upon the year of birth), or wait until age 70. The longer the delay, the higher the monthly benefit will be. Specifically, the benefit will increase by roughly 7 percent per year from age 62 to full retirement age (FRA) and then by about 8 percent per year until age 70. This means that waiting until age 66 will result in a benefit 33 percent higher than if claimed at age 62, and delaying until 70 will yield a benefit 76 percent higher than if claimed at age 62. After 70, there is no additional incentive to delaying.

There is no universal “best’ choice as to when an individual should start receiving benefits. Personal, financial and health factors may dictate when one stops working and begins collecting. Behavioral biases such as a retiree’s assessment of the viability of the Social Security program may also influence the decision whether to collect early or delay payments. For those who question whether the program will be able to pay future benefits as promised, delaying may constitute a risk.

Behavioral biases aside, however, from a strictly dollars and cents perspective, when circumstances warrant, delaying and, therefore, increasing the monthly benefit amount can substantially enhance a person’s retirement security. Let’s discuss the two key considerations that should factor into an individual’s decision about when to start collecting.

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