Make the Most of Social Security Benefits

Filed under: The Advisor's Blog

The solvency of Social Security is a common concern these days, both in the political arena and in our personal lives. Fearing the money won’t be there later, many retirees are claiming their benefits at the first age of eligibility rather than waiting until full retirement age a few years later.

However, this fear is unfounded. While some changes do need to occur in order to ensure the stability of Social Security, we still have quite a few years before we need to worry about a lack of funds. For the average baby boomer today, claiming Social Security too early can negatively impact their retirement income for the rest of their life. Careful consultation with a skilled financial advisor can help individuals and couples determine the best age at which to retire, so that Social Security checks can be maximized.

Accounting Series - Senior FinancesThe earliest age at which Social Security can be claimed is 62. This is not considered “full retirement age”, however, and payments will be permanently reduced to only 75 percent of the full amount due. This means if an individual’s check would normally be 1,000 dollars per month at full retirement age, claiming benefits at age 62 will cause the check to be permanently reduced to 750 dollars per month (plus a cost of living increase each year).

On the other hand, waiting past full retirement age can ensure a larger check. For each year an individual waits past his or her full retirement age, the monthly check increases by 8 percent up until age 70. Working just a little bit longer will earn a retiree a larger Social Security check each month for the rest of his or her life.

So what is “full retirement age”? It depends upon the worker’s year of birth. Those born between 1943 and 1954 reach full retirement age at 66. For those born in 1955, it’s age 66 and two months; for those born in 1956, it’s age 66 and four months, and so on. Those who are unsure of their full retirement age should check the Social Security website at or talk to their financial advisor.

Married couples should give extra consideration to the timing of their claims. Since the lower-earning spouse is dependent upon the higher-earning spouse in order to receive a larger check, delaying the claim is extra important for couples. Forty percent of widows over age 65 depend solely upon Social Security for their entire income, so it’s best to ensure as large a check as possible if this is likely to be the scenario for a particular couple.

Finally, it’s important to understand how Social Security calculates benefits. Check amounts are based on the highest-earning 35 years of an individual’s career. Since it’s common for workers to be at their earnings peak toward the end of their careers, working just a few more years can ensure a higher Social Security check once they retire.


Investment Advisory Services offered through John P. Dubots Capital Management, LLC, CA License # 0822926