Coming Out Ahead of the Game with Social Security
Planning your retirement can be a complex issue. In addition to the basic when and where, there are many financial decisions to be made, including when to begin taking Social Security retirement benefits. You can choose to take benefits as early as age 62, but they'll be permanently reduced. You can take full benefits at your full retirement age (65 to 67, depending on when you were born). Or you can delay taking benefits beyond your full retirement age and receive a credit for the time you delay, up to age 70.
Those are the basic options, but there are other variations, and depending on your specific situation, they could result in higher (or lower) lifetime benefits. Discuss these possibilities with your financial advisor before taking action.
Claim, Invest, Repay, Reclaim
You may be able to file for benefits and collect them for a number of years, then reclaim them when you're older. You'll have to pay back the benefits you've received in the interim, but – here's the key – without interest. That means if you've invested the benefits rather than spent them, you get to keep the interest. Then you can re-apply for benefits at a future date and receive the higher level of benefits due someone that age.
Claim Now, Claim Again Later
There are actually three distinct types of Social Security retirement benefits:
If you're married and your spouse is collecting benefits on his/her own record, you can claim a spousal benefit at your full retirement age and then switch to your own worker benefit at a later date. This allows you to build up delayed retirement credits for your own record, which will result in a higher worker benefit later.
a basic retirement worker benefit based on your work record,
a spousal benefit based on a spouse's work record once the worker has claimed his/her own benefit and
a survivor benefit provided to a surviving spouse after a worker's death.
Claim and Suspend
When you reach full retirement age, you can claim your Social Security benefit in order to allow your spouse to claim a spousal benefit, then suspend payment of your benefit. This allows the value of your own future benefit to increase with the credit for delayed payments.
Don't Rely Solely on Social Security
One of these strategies could potentially increase the total benefits you (and your spouse) receive over a lifetime. But depending on the strategy you choose and when you die, it could also lower them.
No matter how you claim them, Social Security benefits by themselves will not be adequate to fund a comfortable retirement. Your best bet for financial security when you retire is to invest regularly in a tax-advantaged account, such as an individual retirement account or employer-sponsored retirement plan.