retirement

When to claim Social Security

A contrarian point of view
Alicia Munnell and Mauricio Soto of Boston College's Center for Retirement Research looked at couples of varying ages and arrived at a startlingly different conclusion in the study mentioned earlier. While single women should delay taking retirement until full retirement age, they say, the situation for married women is much different.

A married woman whose own benefit would equal 40 percent or more of her husband's benefit should claim as early as possible -- at age 62. Meanwhile her husband should hold off on collecting Social Security until age 69. Why should he do that? Because a woman stands to gain more when the survivor's benefits kick in after he dies. In this case, the husband's decision to delay claiming benefits is a selfless act that takes into consideration his wife's longer lifespan instead of his own.

As for the woman's decision to claim early benefits, her life expectancy isn't the relevant part of the calculation; rather, her husband's life expectancy is. "Because these benefits are expected to be received for a period shorter than the life expectancy of the average person, she has an incentive to claim as soon as possible," the authors say.

The analysis gets more complicated if a woman's benefits amount to less than a third of her husband's. Then their relative ages play a part in the decision.

But how realistic is this analysis? How many men are willing to wait until age 69 to collect benefits? The answer: not many. Between 1992 and 2002, 58 percent of married men put in for benefits at age 62, 12 percent at age 63, 10 percent at 64 and 16 percent at 65. Less than 5 percent of married men waited until age 66 or later to put in their claims for Social Security benefits.

The authors concede that even though the system may provide incentives for many married women to claim benefits early, doing so may not always be in their best interests.

"Early claiming may maximize women's Social Security 'wealth,' but it also encourages them to withdraw from the labor force, creating a loss of earnings and 401(k) savings, and extending the period over which they need to support themselves in retirement."

Bud Hebeler and his wife know "a number of widows in their late 70s and 80s who would dearly have loved to have had larger Social Security checks," he says.

To my way of thinking, unless they have ample resources, most Americans would be better off if they could hold off on collecting Social Security and work for as long as they can possibly stand it.

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