Delaying social security benefits may pay off

The decision of when to start taking Social Security benefits is a personal one and should be based on you and your family’s unique situation. This important decision may depend on many considerations, including your living expenses in retirement, your health, the health of your loved ones, and your expectations for how long you and your spouse (if applicable) will live. What is right for one person or couple may not be right for others. However, delaying your Social Security payments may be advantageous, with the potential to earn up to an additional 8% per year. In this article, we explore a hypothetical example to help you understand the various options regarding when to take Social Security.

Benefits depend on your full retirement age

Meet our hypothetical couple, Anne and her husband George, who both turn 62 this year and are beginning to think about retirement. They’re looking to maximize their Social Security benefits through careful planning and coordination regarding the timing of when they each take benefits. They recently learned that, while Social Security benefits are calculated based on a formula that factors in the income from their 35 highest-earning working years, there are ways they can impact the monthly benefit amount they receive. More specifically, Social Security benefits depend on their full retirement age (FRA), their lifetime income and when they decide to take benefits.

Their FRA depends on what year they were born (see Exhibit 1 below):

  • Those born in 1954 and earlier have an FRA of 66, which is the age where they’re entitled to receive 100% of their Social Security benefits.
  • For each year after 1954, two months are added per year until 1960, when the FRA is 67.
  • So, if you were born in 1956, your FRA is 66 and four months. If you were born in 1958, your FRA is 66 and eight months.


Exhibit 1: How to determine your FRA1

Why wait until your FRA to take benefits?

The age at which Anne and George choose to retire and begin benefits – whether early, at FRA or delayed – has a material impact on the amount of their benefit.

Anne, who was born in 1959 in our hypothetical, can begin claiming benefits at her FRA and will receive her primary insurance amount based on her earnings record. However, benefits can be taken at any time between age 62 and 70. Why wait? By claiming benefits at 62 or any time before your FRA, your benefit will be reduced for your entire benefit period (see Exhibit 2 below).

Given that Anne will turn 62 this year, she may choose to begin taking benefits on her earnings record. This would mean she’d receive about 30% less than at her FRA, and her benefit would be permanently reduced. Alternatively, if Anne postponed her benefit until after her FRA, she would receive an increased benefit each year, the amount of which depends on how long she delays. Anne and George learn that, under current tax law, Anne can increase her eventual benefit from the federal government by a guaranteed 8% per year until age 70. In our current environment of relatively low interest rates, that’s quite a hurdle to overcome if Anne instead decides to take benefits at age 62 and put her money in “safer,” lower-yielding investments, such as cash-like money market investments and bonds. After age 70, there is no increase in benefits, so she and George should then claim benefits if they haven’t done so already.

Exhibit 2: Impact of taking Social Security benefits: Pre- and post-FRA

Benefits are reduced each year before FRA (beginning at age 62) and increase by 8% each year after FRA (up to age 70).

A couple’s conundrum: When should each person take benefits?

There are many other important factors to consider when determining whether to delay Social Security benefits. While this decision may be straightforward for single individuals (based on need, health and how long the person expects to live), it’s more difficult for couples like Anne and George. The complexity arises because couples need to determine how to maximize benefits over two different life expectancies. How do you decide who delays benefits? Would it be better for both people to delay?

Questions to consider include:

  • Who was the higher earner?
  • Are both in good health?
  • Does their family health history support the potential for them to live to an advanced age?
  • What other income-generating investments do they have?


For couples that are both eligible for Social Security benefits and are considering delaying, generally the higher-income earner is the individual who should delay. George had trouble finding a career he enjoyed, so he bounced from job to job and his benefit is equal to just under $1,000 per month. Anne, however, earned a robust income that grew throughout her career and her estimated benefit at her FRA is $3,100 per month. This is known as her primary insurance amount (PIA), the benefit a person would receive if he/she elects to begin receiving retirement benefits at the “normal” (i.e., full) retirement age.

To maximize their benefits, Anne and George determine that George should begin taking his benefits at 67 and Anne should wait until she turns 70 (see Exhibit 3 below). While George takes his benefit earlier than Anne, the overall family benefit is still growing given the delayed benefit credits. With Anne waiting until she turns 70 to begin claiming benefits, they lock in the higher survivor benefit for George should she pass away first. Once Anne takes her benefit, George will be entitled to the spousal benefit, which is 50% of the higher earner’s primary insurance amount at the high earner’s FRA. Since the spousal benefit in this example is larger than George’s personal benefit, he gets his individual benefit plus enough spousal benefit to arrive at 50% of Anne’s FRA benefit.

Exhibit 3: Social Security analysis for Anne and George2

Not every couple is like George and Anne, who are healthy with parents who lived into their late 80s, so there are several considerations regarding timing your benefits to maximize the fit for your personal situation. For couples where both individuals are in poor health, delaying may not be an optimal strategy as they may not live to the age beyond which their lifetime accrual of benefits would be larger (what is referred to as the “breakeven age”). Delaying both partners’ Social Security benefits makes the most sense when both individuals are healthy and have a longer-than-average life expectancy.3

Not sure what to do? We’re here to help

Since this is a complex decision tied to other aspects of your overall financial plan, consider consulting with a qualified CFP® practitioner4 to help decide what’s right for you and your family. We have a long history of helping clients analyze the best solution for each situation. We welcome the opportunity to discuss your options for Social Security distributions and answer any questions you may have.


2 Source: SBH, MoneyGuide.
3 (producer). Maximizing Social Security Benefits for Couples, 11/1/18. Webinar.
4 Certified Financial Planner Board of Standards, Inc. (CFP Board) owns the certification marks CFP®, CERTIFIED FINANCIAL PLANNER™️, and CFP® (with plaque design) in the United States, which it authorizes use of by individuals who successfully complete CFP Board’s initial and ongoing certification requirements.


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