Studies have shown that proper Social Security claiming, optimal tax efficiency in drawing on tax deferred accounts and proper asset location can amount to a person having as much as 50% more money available to them in retirement. Determining an appropriate claiming strategy can be a confusing web of information and without proper guidance, it might feel more like throwing a dart at a dartboard than actually making an informed decision.
What is the right age to claim?
Retirees can apply for social security anytime between ages 62 and 70. But, until you or your spouse reaches your full retirement age (FRA), you won’t be able to take full advantage of social security claiming strategies. When determining the best age to claim, keep these considerations in mind:
- If you claim at 62 there is the potential that you might permanently reduce your benefits as well as the survivor benefits that your spouse will receive.
- If you claim before your full retirement age, you automatically apply for both worker benefits and any additional benefits you qualify for as a spouse. (This is assuming that your spouse is already receiving benefits.)
- Choosing to claim social security after your FRA will give you the option to take one benefit or the other. You can also switch them at a later date, if it makes sense.
- Delaying your claim until age 70 will maximize the amount of benefits you receive and will lock in the highest possible benefits for a widow or widower.
In addition to proper Social Security claiming strategy, optimizing the tax efficiency of asset draw down and making the right decisions about asset location also have a significant impact on their longevity. Clearly, when it comes to determining the optimum social security claiming strategy, numerous variables are at play. At Financial Fiduciaries, we have been helping our clients make these delicate decisions for years. We would be honored to help you do the same!