A friend is 65 and married with a younger wife. They have invested pretty well and want to spend while they are healthy. He is unsure whether to claim at 66 and lock in 40k for life or wait until 70 and get over 50k. If waiting until 70 he would withdraw 40k annually from investments instead of claiming at 66. What is the smartest move given good health and a lower earning spouse.
A different spin on when to claim Social Security
byu/Some-Ear8984 inpersonalfinance
Posted by Some-Ear8984
11 Comments
The general rule for social security is the higher earning spouse waits as long as possible and the lower earner claims as early as possible. This is so the if the higher earner passes away the lower earning spouse gets the higher benefit post death. This is a general rule and may not fit your situation. Link below is an online calculator that can help your decision making process.
[https://opensocialsecurity.com/](https://opensocialsecurity.com/)
In general if you have a large disparity in ages, you are best off delaying taking SS until as late as possible so that you get the larger payment. When one of you passes, the remaining person only gets one SS payment, so you want the payment to be as large as it can.
There is also benefits to this strategy if the younger person is still working so you can better manage taxes.
There are simple calculators that take earnings versus life expectancy to see what will be the most total earnings.
What they don’t take into account is personal happiness with the income levels at various ages.
All that to say, it’s a personal decision based on how old he thinks he will live to and what he could do with the money now versus money later.
I have my parents starting at 70 because they’re (for now, knock on wood) healthy and have a pension. If it meant withdrawing from the market, I’d have them do SSI. Money in the market is just worth too much this generation.
The smartest move is always wait to claim if you have good health, good investment, and a low earning spouse..
My parents scheduled an in-person appointment at the Social Security office years ago and the staff sat down and ran the numbers multiple ways. That let them decide to draw down early on my mother’s and let my father’s fully grow. That will also make the loss of income lessened when one of them passes years before the other, because only her more modest social security will be lost. You need to run the numbers for your specific scenario. I understand there are online tools now on the social security website, but you may still wish to schedule an in person appointment.
Good health and younger spouse usually points to collect at 70 IF you’re the higher earner.
You’ll get a landslide of advice over on the r/socialsecurity subred
If nothing is done about the social security money shortage, benefits will be reduced to 75ish percent of what they are today by 2033. Thus, if you think this will be resolved, waiting is fine. But if not, take it now.
You said: They have invested pretty well and want to spend while they are healthy.
If THIS is their peak spending time, taking SS may be a huge advantage. If they have money “leftover” they can still invest it.
Do you “maximize” the long term income this way? Likely not.
Do you “maximize” traveling and lifestyle while you’re young and healthy? Likely so.
They just have to weigh out which one matters more.
Also, “invested pretty well” could have huge implications. Like they have $4M+ in tax advantage? Or $10M? Or $1M? Probably getting different advice for all 3 answers.
Another rule of thumb is that if you “don’t need it” you take it early.
Remember he’s likely (not guaranteed) going to pass before his wife, and then she’ll be living on one SS payment. It will be the higher of the two payments. If he claims now, then that will be the max she gets. Does his payment support paying 100% of both of their expenses? Likely not. It’s likely better to delay in order to support the survivor not living in poverty or having to sell home, etc after the passing of the first spouse. Generally better to live off of assets a few years before claiming. Exceptions for an economic downturn lasting enough years that your bond allocation is eaten away – then it’s usually better to claim before locking in stock losses.
Don’t sweat it. They’ve (both parties leadership) have engineered Medicaire to take all of your savings. They’re covering less and still allowing pharmaceuticals to raise prices 100-2000% on ordinary medicines. We are saving nothing moving to Medicaire from private health care.