Financial Planning Strategies to Maximize Social Security Benefits

A major decision in retirement planning is identifying when to begin withdrawing Social Security retirement benefits. If you begin receiving benefits before your normal retirement age, you receive a smaller monthly benefit, but with a longer life expectancy (resulting in more benefit checks received); if you delay until after normal retirement age, you get larger benefit with a shorter life expectancy (resulting in fewer benefit checks received). Which strategy is optimum?

The answer depends upon your life expectancy. If you are age 62 and terminally ill, by all means begin drawing your benefits. But if you are healthy, the fact that the trend is to live longer means that taking benefits early is rarely a good strategy. But how long should you delay? What age is optimal?

Throw survivor benefits into the mix and the dilemma of selecting the optimal strategy gets even more confusing for financial planners, even those with their CFP. For example, should a surviving spouse aged 60 begin receiving a widow’s benefit immediately while deferring her own retirement benefit until age 66, or should she begin receiving her own retirement benefits at age 62, while deferring her widow’s benefits until age 66? The difference between these two strategies can exceed $100,000 in lifetime benefits received.

In short, deciding when to take benefits can be much more complicated than financial planners might first perceive. To learn more about this subject, here is an interesting article that provides a number of examples.

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