Since I am only 29 I don’t worry much about social security. But I have a lot of friends who are around 60, and they will be facing choices on when to start taking their social security benefits. Turns out that just like any game, the people who really understand how to play are going to make WAY more money than those who don’t. I recently picked up Get What’s Yours by Kotlikoff, Moeller, and Soloman. Think of it as the Beat the Dealer of how to play the social security game.
There are several different ways you can get benefits, and different times when you can start collecting. In a nutshell, you can start getting money at 62, or you can wait until “Full Retirement Age” which is 66 (plus some months depending what year you were born) or you can wait until 70. The longer you wait, the more money you get every month. About 40% of the people start taking it at 62, and 1% wait until 70. That alone should tell you what the right play is. For the vast majority of people it is right to wait until 70. And they polled social security workers on the advice they give people. As you can imagine it is the equivalent of getting advice from a dealer on how to play blackjack… hopeless.
I can’t boil down the whole book in one blog post – but here is one tip which alone is worth more than the cost of this book, and can easilly be worth 50k. Say you are married, and both you and your wife work. Let’s say your incomes are about equal, and you are the same age. (although this works even better if there is an age difference.) When you hit 66 you “file and suspend”. Basically the idea is you turn on your benefits, but then suspend them until 70. But now your wife can take spousal benefits for 4 years, and then when she hits 70 she can file her own. Basically you get an extra 4 years of payments for her at no cost. When you both turn 70 you get paid at a much higher rate.
If you are close to 60 this book is a must read. I give it… 4 aces.
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With the file and suspend, once the wife turns on her benefits wouldn't she have the take the higher of spousal and her own benefit?
Yes Ed, at that point she would get which ever one is higher.