After 18 years of writing about Social Security and conducting hundreds of analyses for singles, couples, widows, widowers, and divorcees, I figured I had my own claiming strategy nailed down.
So, when I finally ran my own customized analysis, my eyes popped open in astonishment at the recommendation I saw!
Naturally, I assumed I’d claim at 70—not a day earlier. That’s the go-to advice for healthy, married high earners.
I was 100% certain the software would confirm it.
But it didn’t.
Here’s what happened.
I thought I had my Social Security claiming strategy figured out…until I didn’t. Here’s what happened. Share on X
Until two years ago, I was unmarried and hadn’t spent much time on my own claiming strategy. I’m in great health— my Novos Epigenic Age Report pegs my biological age at 45 – nine years younger than my actual age. (Health aficionados – check it out!)
I wanted to maximize my guaranteed, inflation-adjusted lifetime income. Unless my health took a major turn, claiming before 70 wasn’t on the radar. For most healthy, single individuals with assets or income to draw on between 62 and 70, that’s the approach I recommend.
Then I got married to a Canadian.
He is three years my senior and has no prior U.S. work history.
Still, I didn’t give it much thought. I updated our retirement projections for the last two years, continuing to use my standard assumption for claiming at age 70.
But this year, the details started to matter.
What changed?
Two significant changes made a bigger impact than I realized. First, I’m now 54 (my husband is 57), and have entered the timeframe where the details matter.
When someone is within ten years of age 62—the earliest you can claim benefits—I stop using rough estimates. That’s when I switch to detailed calculations based on actual earnings history and projected work years.
I diligently entered my earnings history and projected earnings from now through age 70 into Social Security Timing, my preferred advisor-facing software package for this function.
Second, I got married, and my husband will only have 10 years of work history that will “count” toward Social Security. Unlike in the past, I had to figure out how to handle my husband’s earnings. He’s self-employed and will barely log ten years of U.S. work history before his Full Retirement Age (FRA), which is 67.
How Social Security calculates your benefits
It’s worth taking a brief detour in my story to explain how Social Security calculates your benefits:
- Take your highest 35 years of earnings.
- Index them to inflation, resulting in AIME (Average Indexed Monthly Earnings).
- Run AIME through the bend points for the year you reach age 62. This calculates a monthly benefit amount called your Primary Insurance Amount (PIA). (See graphic for detail on bend points – uses 2022 data – however, they are indexed to inflation each year.)
- Post age 62, your PIA increases based on the annual Cost of Living Adjustment (COLA).
- After age 62, new earnings aren’t inflation-indexed for the AIME—but if they’re higher than one of your lowest 35 years, they can still boost your benefit.
Based on the numbers, my husband’s earnings weren’t likely to generate a retirement benefit larger than his spousal benefit. Even with ten years of work, he’d still have 25 years of zeroes in his record.
How spousal benefits work
If you’ve been married for at least one year, you may be eligible for a spousal benefit of up to 50% of your spouse’s FRA benefit—if you claim at your FRA or later. You’ll receive whichever is higher: your own benefit or the spousal. Not both.
- Note: FRA is age 67 for anyone born Jan. 2, 1960, or later. Survivor benefits use a different FRA. Don’t confuse the two!
- Note: Spousal benefits don’t grow past FRA and are reduced if claimed before FRA.
- Note: To claim a spousal benefit, you and your spouse must both be age 62, and your spouse must have filed for their benefits before you are eligible for a spousal benefit.
- Note: Divorced? If you were married 10+ years and remain unmarried, you may be eligible for an ex-spouse benefit. (Different rules apply.)
In our case, we only need to focus on the spousal benefit rules. But I can’t stress this enough: there are distinct—and often confusing—rules for each benefit type. Here’s a quick breakdown:
- Retirement benefits – Based on your own earnings record.
- Spousal benefits – Based on your spouse’s record. You must be age 62+, and your spouse must have filed.
- Divorced spouse benefits – Available if you were married 10+ years and remain unmarried. Your ex does not need to file first.
- Survivor benefits (current spouse passes away) – You must have been married at least 9 months. Can claim as early as age 60. Different FRA applies. Can switch later to your own benefit.
- Ex-Spouse Survivor benefits (divorced & ex-spouse passes away) – Available if the marriage lasted 10+ years and you were not remarried before age 60. Switching options also apply.
- Disability benefits – Eligibility based on medical condition and work credits.
- Benefits for dependents – May apply if you have a child under age 18, disabled, or still in school.
If you are in any of these situations, don’t assume the rules that apply to one benefit type are universal. There are nuances to each benefit type. I’ve captured only the highlights in my list above.
Our Recommended Claiming Strategy
Back to my story…so what did the software recommend based on my earnings alone?
Claim at 67.
I stared at the screen.
This can’t be right.
What about maximizing survivor benefits? What about longevity risk? I used life expectancies of 90 for each of us, which, in this software package, impacts the calculations.
Perturbed, I bumped life expectancy to 95 for each of us. It moved my recommendation out one year – to 68.
“What?” my brain exclaimed. “What assumptions get me to my planned age 70 claiming?”
Inflation and Return Assumptions
I began experimenting with assumptions, such as the assumed annual inflation rate (currently 2.4%) and the assumed real rate of return (currently 2.55%, based on Treasury data). Both of these inputs impact the projections and recommendations.
The real rate of return is what you expect to earn—safely—above inflation. Add that to the inflation rate, and that would be the total investment return you might expect – in this example, 4.95% (2.4 + 2.55).
The real rate of return is used to take the future cash flows expected from Social Security and turn them into a present value number – essentially what lump sum would you have to have, earning a real rate of return of 2.55% or more, that would deliver the same cash flows as Social Security. That lump sum view allows you to compare claiming strategies on an apples-to-apples basis in today’s dollars. In our case, changing these assumptions did not change my recommended strategy.
Here’s why.
Spousal Benefits and Age Intersect
I’m the higher earner—but not the older spouse. At 67, my FRA, my husband can claim a spousal benefit – and even if we live a long, long time, the extra monthly amount we get by me delaying until 70 doesn’t make up for the three years where he gets nothing if I delay until age 70.
While I understood the math, I still felt incredulous. Naturally, I ran a second analysis—nerd mode fully engaged.
I went over to Open Social Security, a free online program, to run the numbers there. (Fritz provides a detailed analysis of this tool and how he used it in his post on How to Determine When to Claim Social Security.)
And it got even more complicated!
Open Social Security
At Open Social Security, when the answers initially didn’t make sense, I discovered a tiny box at the top that says “Click here to hide the selection list.” I clicked it and it opened an expanded list of options, where I could then click “still working.”
Then I entered our PIA, the approximate month we’ll stop working, and our monthly earnings until the month we retire. (I don’t like that I can’t input actual earnings into this package. It’s fine for a ballpark estimate, but not great for people with complex earnings trajectories.)
The recommended strategy? I claim at 66 and 8 months, and my husband at 69 and 6 months.
Hmmmmm…
The Earnings Limit
At 66, I will still be subject to the earnings limit, which reduces your benefit if you claim before FRA and earn more than the annual adjusted limit.
I turn 66 in May 2037. I would be 66 for 7 months that year. If I claimed at 66, my benefits would be reduced $1 for every $2 earned over the limit for the 2037 calendar year.
However, Social Security uses two earnings limits—one for years before FRA, and a higher one for the calendar year you attain FRA.
In your FRA calendar year, a higher earnings limit applies, and only earnings before the month you reach FRA are counted. At 66 and 8 months (2038), I will be within the calendar year where I reach my FRA – so a higher earnings limit applies, and only earnings before FRA count. So, technically, I could start benefits a few months before my FRA and would not be subject to the earnings limit for those few months. But just because I could, doesn’t mean I should. I would be quite reluctant to claim any time before FRA.
Why Different Recommendations?
So why did the two tools offer recommendations that differ by four months? I’ve gone down this rabbit hole before. It usually comes down to how each software calculates present value. This time, I chose not to investigate.
Instead, I was deep in calculation frenzy (like shark frenzy for nerds in spreadsheet mode), so I went back to Social Security Timing, where I tested different earnings scenarios to see when my husband might qualify for a benefit of his own.
If he earns enough, the recommended strategy changes – he should claim at 67, receiving his retirement benefit. I would claim at 70, maximizing my retirement and survivor benefit. And when I claim at 70, he instantly becomes eligible for a spousal benefit, which would be more than his retirement benefit, so he would begin receiving what I call a spousal “top-off payment” to level-up his benefit amount to the full spousal amount.
Basically, you get your retirement benefit or the spousal benefit – whichever is more. If the spousal amount is more, the calculation pays your benefit first, and then the difference is added as the spousal amount. I call it a “top off”.
What’s On the Line
The difference between best and worst (claiming as early as possible) strategies was $200,000 in terms of present value, assuming I live to 95. That’s a lot of money on the line.
However, as we delved into nuances, such as claiming ages of 67 or 70, the differences in outcomes became smaller. Perhaps $30,000, $40,000, or up to $80,000 is at stake. Still not pocket change.
There is real money at stake in this decision.
So, what will we decide?
The Unique Characteristic You Can’t Get Anywhere Else
We have a decade before my husband’s FRA – so we have time to figure it out.
But most likely – I’ll delay until 70.
Why?
Retirement comes with risks—and not everything can be measured with a rate-of-return lens. What if I live to 100? In my mind, I’ve always planned to. Social Security provides lifelong inflation-adjusted income – a unique characteristic you can’t get from investments or anywhere else.
Essentially, Social Security becomes a unique puzzle piece in our plan—doing what no other investment can.
People who claim early to “invest the difference” are missing this point entirely. They are also frequently neglecting to factor in the value of future inflation adjustments, taxation, their own future cognitive abilities to maintain an investment program, and, if married, the value of the survivor benefit using joint-life expectancy odds.
What About the System Running Out?
The annual Social Security Trustees report has just been released, and headlines are vying for our attention with claims of Social Security’s impending “insolvency.” I see frequent queries in retirement planning chat groups from people considering claiming at 62—because they fear that if they don’t, they’ll get nothing.
It doesn’t work this way. In the software, I can click a button that implements a 21% benefit cut. And guess what? It doesn’t change the recommendation. Because if you delayed, you’re still getting 79% of a larger number. And that number is still going up with inflation, and providing a unique benefit that no other asset can provide.
I don’t know what is going to happen – but I do fear Congress will wait too long to act. In the 80’s the system was facing imminent insolvency – potentially a few months of benefit payments remaining. You can read about an excellent overview of it – and a comparison to what is going on today at Congress.gov.
I do believe the system is a success and should continue. And I do believe we should all tell our representatives we’d like them to prioritize this now – and not procrastinate a day longer.
Conclusion: My Take-Away
This whole experience reminded me that rules of thumb don’t cut it as you approach retirement.
While reporters love simple axioms—Social Security and “simple” don’t belong in the same sentence.
As you’re planning for retirement, don’t finalize your Social Security claiming strategy without doing your research. Don’t let the headlines scare you into making a poor decision. Also, recognize that spousal benefits can make a big difference in when you claim, and there’s serious money at stake in the decision.
I thought I had it all figured out, but then I got married, and the spousal benefits impact was more significant than I realized.
Learn from my experience.
Do your homework, then do it again.
Continue to refine your numbers as you get closer to your claim date. Determining when to claim your Social Security is an important decision. Take the time to understand your options before you finalize your plan.
Your Turn: What age are you planning on claiming Social Security? What lessons have you learned about spousal benefits, and did they impact your claiming decision? Let’s chat in the comments…
PS: Dana in the Wild
For podcast fans, I was recently on two podcasts that may be of interest:
