Ask Rusty – Is Waiting until 70 Still the Best Plan to Maximize Social Security?

National Social Security Advisor at the AMAC Foundation

Dear Rusty: My wife started her Social Security at 62 in March 2017 and I filed a Restricted Application to collect a spouse benefit from her shortly thereafter. Our plan is for me to file for my own Social Security later this year when I turn 70. Then my wife will file for her spousal benefit from me. Our life expectancy is 93 & 96. Is this still the best plan for maximum payments? Signed: Planning Ahead

Dear Planning: Yes indeed. You've chosen an excellent strategy, and one which is no longer available to younger beneficiaries. The Restricted Application option you chose, to get only spouse benefits and let your own increase, was eliminated for anyone born after January 1, 1954. 

When you turn 70, you will be eligible for your maximum SS retirement benefit to start at that time. Social Security recommends that you apply about 3 months before you wish benefits to begin (you will specify on the application when you want benefits to start), so you can apply before your birthday if you like but just be sure to be explicit that your benefit-start-month is the month you turn 70. That way, you won’t lose any of the Delayed Retirement Credits (DRCs) you've been accumulating since you reached your full retirement age (FRA) of 66. Your benefit at age 70 will be 32% more than it would have been at age 66.

Note that when you apply, Social Security will probably offer to pay you 6 months of retroactive benefits. Although that lump sum can be quite tempting, accepting it will also reduce your Social Security benefit amount by 4% for the remainder of your life. With a life expectancy in your 90s, I suggest you choose wisely. 

After you have submitted your application for Social Security retirement benefits your current spousal benefit will stop as soon as your higher benefit starts. After you apply for your age 70 benefit, your wife’s spousal benefit will be automatically awarded when your own benefit begins (automatic because she was born after January 1, 1954). For information, your wife's spousal benefit will be based upon your full retirement age benefit amount, not the increased amount you will receive because you delayed until age 70. You should also be aware that your wife's benefit as your spouse will be less than 50% of your FRA benefit amount because she claimed her own benefit at age 62 (claiming her own benefit early affects her spousal benefit amount). 

Nevertheless, with a life expectancy in your 90s you have chosen an excellent strategy which will pay you the highest possible monthly amount and the most in lifetime cumulative benefits, while also providing the highest possible survivor benefit for your wife should you die first. Although waiting until age 70 to claim isn’t the right decision for everyone, in your specific case I congratulate you for making a very wise choice.