social security considerations

Social Security plays a large role in the retirement of most Americans. In fact, for about 1/4 of elderly married couples Social Security makes up 90% or more of their income. Since this is a major factor in retirement it is important to understand the options and make purposeful decisions when filing. Below is some basic information and a few thoughts on how to approach the decision of when to file.


Basic information:


  • - Full retirement age is currently 66. If you file prior to full retirement age and earn more than $16,920 this year some benefits may be withheld.
  • - You can file for retirement benefits as early as age 62, claiming early reduces your full retirement age benefit by an average of 6.25% per year.
  • - You can delay benefits to age 70, delaying benefits increases your full retirement age benefit by an average of 8% per year.
  • - If married, your spouse is entitled to a spousal benefit up to half of your full retirement age benefit, if higher than their own. Keep in mind, you must have filed for your benefit for your spouse to file a spousal benefit. Spousal benefits can be filed as early as age 62 but as in regular benefits, filing early will reduce the amount. Spousal benefits do not accrue beyond full retirement age so generally it doesn’t make sense to delay a spousal benefit beyond full retirement age.
  • - Social Security has an annual inflation adjustment that varies from year to year. It has been as little as 0% (three times) and as high as 14.3% (1980), for 2018 it will be 2%.


Thoughts on when you should file:


  • - Consider your retirement income sources. In my opinion many people file too early and sacrifice higher future income for income sooner. If you don’t need the income now, consider delaying. Also, think about what your 80-year-old self might tell you. A $2,000 monthly benefit at full retirement age would be $1,500 if claimed at 62 but would be $2,640 if delayed to 70.
  • - Consider your life expectancy. In most cases delaying makes a lot of sense, however, in situations of poor health, filing earlier may allow you to collect more benefits then if you wait. A word of caution is to also consider your spouse. When one spouse passes away, the higher of your two benefits remains in place, so delaying to protect their income can still make sense, especially if you don’t need the money now.
  • - Coordinate benefits. If you are married it dramatically increases the number of filing options. It is important that you coordinate when you each file to make the best use of your combined Social Security benefits.


Will it be there? I don’t know. This could be a long topic of conversation, especially knowing that Social Security statements now state:

Your estimated benefits are based on current law. Congress has made changes to the law in the past and can do so at any time. The law governing benefit amounts may change because, by 2034, the payroll taxes collected will be enough to pay only about 79 percent of scheduled benefits.

What I do know is that it is a very important benefit and making significant changes won’t be done lightly. I think there is a good chance that for younger Americans it may look different than it does today. If you want to be conservative, you can plan your retirement based on reduced or even non-existent benefits. Some of my clients elect to illustrate their plans based around this idea.


If you would like to discuss your Social Security benefits let me know. It’s an important decision so be confident you’re making the right one for you. 


Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

Rancho Bernardo Financial Planner