3 Ways to Decide When to Claim Social Security

The age you sign up for Social Security can impact how much money you get. Here are three often overlooked aspects of the program to consider before claiming you due.

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Early retirement will reduce the spousal benefit. Claiming Social Security before your full retirement age will reduce the size of the benefit. This also applies to the spousal benefit. For example, a wife can claim a spousal benefit based on the earnings record of her husband. The wife’s maximum spousal benefit is 50 percent of the husband’s benefit at the husband’s full retirement age. If the husband claims benefits early (before full retirement age), that will not affect the wife’s spousal benefit. However, if the wife claims the spousal benefit before her full retirement age, the spousal benefit will be permanently reduced to less than 50 percent.

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Delayed claiming does not increase the spousal benefit. An eligible worker who delays claiming Social Security until age 70 can substantially increase the size of his or her monthly checks. But delayed claiming by the worker does not increase the amount that a spouse can receive as a spousal benefit. Spousal payments are calculated based on the payout the working spouse is eligible for at his or her full retirement age. Survivor’s benefits, however, can be increased by delayed claiming.

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Working while receiving Social Security can increase your total payments. Many people assume that working for a paycheck after claiming Social Security retirement benefits is a bad idea because benefits will be reduced. This is only partially true. If you sign up for Social Security after you reach your full retirement age, your benefit will not be reduced no matter how much you earn. Your benefits may be reduced by employment income if you claim before your full retirement age, but this reduction is only temporary. After you reach your full retirement age, your benefit will be increased to reflect the withheld money and your continued earnings.

Mark Patterson is an engineer, patent attorney, baby boomer, and author of The Failsafe Retirement System. He blogs on matters of personal finance and retirement planning at Tough Money Love and Go To Retirement.

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