March 7, 2021

Bucks: When to Collect Social Security? A New Calculator

Last week, we reviewed AARP’s new Social Security calculator, which helps you figure out when to begin collecting benefits. This week, we’re going to take a look at some more tools that will help you make this decision. Below, we take a look at the first one.


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Deciding when to begin collecting Social Security benefits may be one of the most important decisions retirees make. It’s certainly one of the more complex, especially for married people.

That was the conclusion Russell Settle, a retired economics professor who taught at the University of Delaware, came to when he tried to figure it all out. After talking about it with a friend, another economics professor who was also unable to find answers to his questions, they decided to write a program of their own. “It was far more complicated than we ever imagined,” he said.

Professor Settle and his partner, Jeffrey Miller, worked on their program part time for nearly two years. What they came up with is, which generates the optimal age when you (and your spouse, if you have one) should begin collecting benefits.

“Our calculator provides information that allows a person to pick any claiming strategy they want, and they can see how much it costs them relative to the optimum,” said Professor Settle. “Our findings show that life is much more complicated than simple rules of thumb suggest,” referring to the oft-cited advice for most people to wait until 70 if possible.

To start, the Web site asks you to enter basic information: the year you were born, gender, life expectancy and estimated benefit amount, which can be found on an old statement or the Social Security Web site. Once you do that, and provide an e-mail address, a free customized report should arrive in your inbox within a couple of hours.

I ran a couple of different scenarios: one for a married couple and another for a 62-year-old single woman we’ll call Betty, who expects to receive a monthly benefit of $2,000 at her full retirement age.

Betty’s three-page report included a graphic analysis that showed the optimal time to take benefits and the total amount she could expect to receive during her life, based on different life expectancies. The results? If Betty doesn’t expect to live beyond age 78, she should begin taking her benefits at age 62. The graph shows how much in lifetime benefits she would give up for each additional year she waited.

But if Betty expects to live until she’s 86, the program shows that the optimal age for her to collect is 68. Of course, if she’s still alive and well into her 90s, waiting to collect until 70, when she could collect the maximum, would make the most sense. With longevity on the rise, many financial experts advise healthy people to delay benefits, if they can afford to.

Deciding when to file for benefits get incredibly more complicated for married couples (in this case, a 62-year old man and a 58-year-old woman who expect to collect monthly checks of $2,100 and $1,500, respectively).  Their report came in at a whopping 40 pages! But don’t let that discourage you. You don’t have to slog through every page. Once you get the hang of reading the charts, the results are really illuminating and easy to understand.

The first analysis was based on what it called a normal planning horizon, or a life expectancy of 82 years for him and 86 years for her.  If they pursued the optimal strategy, they would collect a total of $610,000 in benefits over their collective lifetimes. To do so, the wife should file for benefits at 62. The husband should file for spousal benefits on her record at age 66. Then, once he hits 70, he should begin collecting retirement benefits on his own earnings record.

A grid shows how much less they would collect at every possible age combination, from 62 to 70. For instance, if the husband and wife started benefits at 64 and 63, they would collect 10 percent less than the optimal amount.

The advice changes for the couple if you want to plan for a much longer life — and many planners would probably suggest that you should. But with this tool, you can plainly see how much you’ll leave on the table by collecting benefits at a suboptimal time.

Though the calculator does a good job of illustrating all that, the analysis is limited. It does not take into account that some people may work part-time while collecting benefits before their full retirement age, which could cause at least some of their benefits to be withheld and recalculated later (but it does have a lengthy discussion about the topic on its site). It also doesn’t help you figure out if you can afford to delay Social Security. It doesn’t factor in how much you’ve saved or if you have a pension. It also doesn’t account for any children who may be eligible to collect benefits on a parent’s record.

And here’s another limitation: the calculator only provides the total value of your benefits over your lifetime, so you won’t know how much you will collect each month if you pursue one of their recommended strategies. Without those numbers, it’s hard to ascertain if you can make that strategy work with your other savings. But the company is working on adding those figures.

Moreover, the calculator only works for single and married people, not widows, widowers and divorcees; those versions are still in the works.

Of course, like other tools, it doesn’t come with a crystal ball, which means you’re going to have to decide on a reasonable life expectancy. Many financial planners suggest that seemingly healthy people base their calculation using longer time horizons. But the results do compare how the optimal strategy would change using three different life expectancies, which is really informative.

Give it a try and let us know what you think in the comment section below.

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