Financial planning tools and services to put you on the path to the future you want
Your guide to financial planning and retirement
Connect with peers and experts
Get to know the people behind the company and the mission behind the work
Offer financial wellness to the people at the heart of your business
May 8, 2017
Most people think that saving enough for retirement is the most important aspect of preparing for your future. However, guaranteeing the maximum amount of retirement income is probably your best move.
Things can and do happen to savings. It is fairly common for people to use up these reserves. Medical costs, unexpected emergencies, and twists in the stock market can dramatically change your fortunes.
Guaranteed retirement income – income that you will receive every month no matter what and for as long as you live – can be the key to a secure retirement. Social Security is one of the best sources of guaranteed retirement income. This is why maximizing your Social Security income is a good move.
If you want to try to get as much money as possible out of Social Security and you want the highest amount of retirement income for as long as each you and your spouse live, then you probably want to do the following:
Financial advisors say that many retirees get this wrong and it can hurt them down the road.
Delaying benefits is a good Social Security decision for anyone – you just get more money every month the longer you wait to start getting payments.
However, if you are married, you may have an additional incentive to delay benefits. If one of you dies before the other, then the surviving spouse will get to make a choice about which Social Security benefit to receive. (A surviving spouse is entitled to just one benefit – not both.)
The bad news is that collecting just one Social Security check each month after the death of a spouse can mean a significant income drop for the survivor – a financial stress to pile onto the the grief of loosing your partner. Also, spousal benefits can no longer be switched.
It is far less important what the other spouse does. Early is fine if that’s what is desired. (Although delaying benefits to increase your monthly paycheck is usually a good move for most everyone.)
Experts recommend following these rules of thumb for anyone trying to make a Social Security decision for themselves – not factoring in spouses and spousal benefits:
You can start receiving a Social Security retirement benefit as early as age 62. But there’s a huge carrot for retirees who patiently wait. Between the age of 62 and 70, you earn a higher benefit for every month you wait to start collecting your benefit. Delay all the way to age 70 and the payout will be about 77% more – more than double – than the benefit you are entitled to take at age 62.
Let’s take a look at how this might play out for a 60-year old earning $100,000 this year. The chart below shows an estimated monthly payout for three different ages*:
*The amounts are shown in today’s dollars. Adjusted for inflation, the payouts would be: $1,794 if started at age 62; $2,820 at the Full Retirement Age; and $4,154 at age 70.
Perhaps the best way to explore how to make the best Social Security decision is to use a reputable retirement planning calculator.
If you don’t know already, begin by getting a quick estimate of your Social Security benefits at different claiming ages. Then, circle back to the NewRetirement retirement planning calculator. This reliable system automatically adjusts Social Security income to the higher earning spouse at the longevity of the other and it is easy to try different scenarios and compare results.
Start with one strategy, then try something different – this system automatically tells you how your cash flow, out of money age, net worth, and future estate change with each tweak to your plan.
Immediately see how your finances change:
Switch any detail of your retirement finances – income, savings, rate of return, inflation, and so much more – and see what happens.
Do it yourself retirement planning: easy, comprehensive, reliable
Take financial wellness into your own hands and do it yourself retirement planning: easy,
Share this post:
Our weekly newsletter full of inspiration, podcasts, trends and news.
© 2023 NewRetirement, Inc. All rights reserved.
Disclaimer: The content, calculators, and tools on NewRetirement.com are for informational and educational purposes
only and are not investment advice. They apply financial concepts in a general manner and include
hypotheticals based on information you provide. For retirement planning, you should consider other
assets, income, and investments such as equity in a home or savings accounts in addition to your
retirement savings in an IRA or qualified plan such as a 401(k). Among other things, NewRetirement
provides you with a way to estimate your future retirement income needs and assess the impact of
different scenarios on retirement income. NewRetirement Planner and PlannerPlus are tools that
individuals can use on their own behalf to help think through their future plans, but should not be
acted upon as a complete financial plan. We strongly recommend that you seek the advice of a financial
services professional who has a fiduciary relationship with you before making any type of investment or
significant financial decision. NewRetirement strives to keep its information and tools accurate and up
to date. The information presented is based on objective analysis, but it may not be the same that you
find on a particular financial institution, service provider or specific product's site. All content,
tools, financial products, calculations, estimates, forecasts, comparison shopping products and services
are presented without warranty.