Single, childless retirees who have never been married may have fewer strategies available for claiming Social Security benefits than spouses, widows, and divorcees, but no less incentive to help maximize their retirement income stream.
Indeed, singles need not worry about how the timing of their Social Security benefits may impact a surviving spouse or minor children, which motivates many to begin claiming benefits at the earliest opportunity – age 62. But that may not provide the biggest payoff.
Why? Filing for benefits before your full retirement age, which is age 66 or 67 depending on the year you were born, results in a permanent reduction in the amount of your monthly benefit to compensate for the extra years you will be collecting Social Security.
That reduction can impact single retirees disproportionately if they do not have a spouse, family members, or younger friends they can count on to act as caregivers if their health should fail. In fact, single seniors who lack a support network are sometimes forced to move into assisted living facilities sooner than their peers, which can be costly. Those who are healthy and able to work a few extra years can help reduce the risk of outliving their savings significantly by waiting until at least their full retirement age to collect Social Security, which would entitle them to 100 percent of their monthly benefit.
Maximizing your benefit
Perhaps the biggest opportunity to augment your guaranteed retirement income is to delay your benefits even longer, which is among the most effective Social Security strategies for singles. The amount of your monthly check will increase by 8% per year for each year you delay benefits after your full retirement age until you reach 70 when delayed retirement credits cease to accrue. Thus, by resisting the urge to file for benefits early and working a few extra years as you are able, you not only position yourself to save more into your retirement accounts and also increase the size of your monthly Social Security check down the road — a potential game changer, especially for those who have under saved.
Keep in mind, however, that delaying retirement benefits is not the right move for everyone. Singles who do not expect to reach the average life expectancy based on family medical history or due to a life-threatening diagnosis, and those who have immediate financial need, may do well to claim at the earliest opportunity.
To illustrate
Each claiming strategy produces a different outcome in terms of lifetime payout. To illustrate, let’s consider hypothetical Michelle. Michelle was born in 1958, making her full retirement age 66 and 8 months. Her full retirement age benefit currently is $2,400 a month. If she begins collecting at age 62 and lives to age 95, her cumulative lifetime benefits would be more than $200,000 less than had she waited until her full retirement age, and nearly $375,000 less than had she waited until age 70.
Your own calculation would likely be different, depending on how much you earned, how much you contributed to Social Security, and the age at which you started claiming benefits.
Social Security retirement benefits are one of the few sources of retirement income that are guaranteed to last as long as you live.
Before making a decision about this important benefit, it’s a good idea to learn about the filing options that may be available to you. A Social Security representative can help. In addition, a financial professional can help you compare potential payout scenarios to help you make a more informed decision.