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Retirement Planning > Social Security > Claiming Strategies

Two Social Security Claiming Case Studies, One Conclusion

By John Manganaro

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This is the latest in a series of biweekly articles featuring Social Security claiming case studies drawn from the ALM publication “2024 Social Security & Medicare Facts,” by Michael Thomas with support from Jim Blair, a former Social Security administrator, and Marc Kiner, a planning expert with extensive experience in public accounting.

Scenario No. 1: Single Earner With the Option to Delay

Virginia was never married and is not eligible for benefits from any other individual’s work record. She was born in September 1962, meaning her full retirement age is 67, and her projected monthly FRA benefit is $2,024.

Given this straightforward situation, Virginia’s options are limited to filing for benefits on her own work record between ages 62 and 70.  If she delays benefits past her full retirement age, she will earn delayed retirement credits — but when she dies, the benefit ends, and no survivor will benefit from the bigger monthly check.

Key to the claiming math is her actuarially projected death age of 87, according to the authors. There is more than a $90,000 difference in the projected total lifetime payout between the potential claiming strategies.

What the Numbers Show

With respect to maximizing the lifetime projected benefit, the least effective approach would see Virginia file at age 62 in October 2024 for a reduced worker benefit of $1,425. This would give her a projected lifetime benefit of $431,775.

More than $60,000 in additional projected benefits comes from assuming Virginia can rely on other income sources and wait to file for her full retirement age benefit in September 2029, when she turns 67. This approach delivers a projected lifetime benefit of $493,856.

The optimal approach, according to the authors, is for Virginia to wait until September 2032 to file for her maximum benefit of $2,509 at age 70. This results in a projected lifetime benefit of $521,872 — an increase of more than $90,000.

Scenario No. 2: Married Couple Five Years Apart in Age

Another scenario considered by the authors involves George and Joan, a married couple five years apart in age. Given their birth years, George will reach full retirement age at age 66 1/2, while Joan reaches her FRA at 67.

In the scenario, George had significantly more income than Joan, who is expected to survive George by 7 1/2 years.

George’s FRA benefit is $2,647, while Joan’s is $724, and the pair has as many as six claiming scenarios to consider. These come along with more than a $100,000 difference in the lifetime projected benefits for the couple.

What the Numbers Show

The least optimal strategy for this couple, according to the authors, would have seen George file in January 2024 for a slightly reduced worker benefit of $2,602, while Joan waits to file for her reduced benefit of $509 in October 2024. Eventually, Joan would switch to collecting her survivor benefit ($2,602), delivering projected lifetime benefits of just over $1 million.

A better approach would have seen George wait for April 2024 to file for his FRA worker benefit of $2,647, while Joan waits until September 2029 to file for her FRA benefit of $724. She then, once again, eventually switches to her survivor benefit, delivering about $18,000 in additional lifetime benefits.

A much bigger increase comes from assuming that George waits until October 2027 to file for his maximum worker benefit of $3,388, while Joan waits until age 67 to get her FRA worker benefit of $724. She would also file for her spousal benefit at that time, and this would “top up” her benefit to $1323.50.

Joan then switches to the maximum survivor benefit down the line, garnering a total projected lifetime benefit of more than $1.1 million.

So, Is Delaying Always Best?

While these case studies show the power of delayed Social Security claiming in many scenarios, there are particular situations where claiming earlier makes sense — either from a benefit maximization perspective or as a matter of necessity.

For example, a prior case study in this series showed that a couple with a big age gap could potentially benefit from the lower-earning spouse claiming their benefit at age 62 while the higher earner — the older member of the couple — waits until age 70 to claim their benefit. This approach delivers an excess $130,000 in projected benefits of early claiming.

In other situations, people simply cannot afford to delay claiming due to their inability to work beyond age 62 or due to a lack of other income sources that can make waiting for the FRA or maximum benefit feasible. In the end, each couple and individual has to asses their distinct claiming options, and wealth maximization isn’t the only factor in the calculus.

Credit: Chris Nichols/ALM

John Manganaro

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