Working longer in order to build up your Social Security benefits and your retirement savings is an extremely powerful way to make your retirement more secure. If you are married and you are the primary breadwinner, working longer and claiming later also secures a larger lifetime income benefit for your surviving spouse.
This is a relatively straightforward Social Security strategy. In the last few years, relatively complex Social Security strategies have become the hot topic in financial planning. Claiming strategy calculators are now available online for consumers and professionals alike. With these, the lifelong cumulative benefits under one strategy vs. another can be illustrated. What is becoming clear to everyone is that these differences can be staggering.
Dual income married couples often overlook the ability of the main breadwinner to draw a spousal benefit based on the spouse’s record while allowing his or her own record to accrue delayed retirement benefits. The main breadwinner then switches to his or her own (and now larger) retirement benefit at a later date. This also secures the larger benefit for the spouse as a survivor should the main breadwinner die first.
Widows also have options. Instead of collecting a widow’s benefit at age 60 based on the deceased spouse’s earnings record, a widow could wait until age 62 and then begin claiming her own retirement benefit without affecting her steadily rising widow’s benefit. At full retirement age, the widow could switch to the widow’s benefit for life.
Other strategies are also available. Accruing the largest benefit possible should be everyone’s primary objective. The reason? For every two people reaching age 65, there is a 50 percent chance that one of them will live until age 93. For most people, Social Security will be their best bet for a guaranteed lifelong income that keeps up (even if only partially) with inflation.
Laura Wilcox is a financial planner at Wilcox Financial Advisors S.C. in Greenfield.
