This article is for those individuals who are single and have never been married. Most articles written about Social Security claiming strategies address the analysis for a married couple. This is simply because planning for married couples revolves around these 3 criteria:
- Maximize the high earner Social Security benefit.
- Coordinate the benefits between the spouses.
- Maximize the Social Security survivor benefit.
If you are currently single and have been married, you will follow the criteria above.
For those who have never been married, items #2 and #3 do not apply, so your planning strategy is different. Your planning is different because you have never had a spouse, so no one will be eligible for a spousal or survivor benefit from your benefit. This article does not address disability benefits. Your concern is centered around #1. As a single individual, you still have many of the same concerns that couples do. Listed below are the relevant questions you need to answer.
Relevant Questions
- What is my full retirement age?
- How is my health and do I expect to live to 80?
- Do I currently need the cash flow from Social Security?
- How long do I plan on working?
- Do I take my benefit early knowing that they will be reduced?
- If I take benefits early, will the annual earnings limitation come into play?
- Do I delay taking benefits and take advantage of the delayed retirement credits?
- If I have delayed benefits, should I receive retroactive benefits?
- If I delay benefits, how long do I plan on living?
- If I have another state or local government pension (non-covered pension), how will this impact my claiming strategy?
- What are the income tax consequences?
- Does the Income Related Material Adjustment Amount (IRMAA) affect my Medicare premiums?
- How does filing for Social Security benefits fit into my overall planning and affect my total portfolio?
There is no substitute for “running the numbers,” and preparing an individual analysis specific to your needs.
From my experience, here are the general rules for singles:
- If you need the cash flow to subsidize your lifestyle – claim early, taking into consideration the annual earnings limitation.
- If you are in poor health – claim early, taking into consideration the annual earnings limitation.
- If you expect to live between the ages of 62 to 80, claim benefits at 62. The reason is the total lifetime benefits are relatively the same no matter if you file at 62 or 70.
- If you expect to live between ages of 81-84, claim benefits at your full retirement age.
- If you expect to live longer than age 85, claim benefits at 70.
The general rules listed above are designed to maximize your overall lifetime benefits. These general rules may or may not fit into your plans. You may determine that your life expectancy is 90 based on your current health and family history but you do not want to play longevity roulette with your Social Security benefits. Instead of waiting until age 70 to claim benefits, you take them at 62 – your choice. The redeeming factor with this thought process is that you are only affecting yourself. This is definitely an individual decision.
Always remember, take the wrong Social Security benefit at the wrong time, it’s always smaller and it’s forever.