Social Security Planning: Always Have a Plan B

You already know that Social Security is just one piece of your overall retirement picture. The program was conceived as supplementary income only, and shouldn’t be relied upon to completely fund retirement. On the other hand, it’s certainly an important part of your plan. Those benefits will be an important part of your monthly income so it helps to know what you can expect from the program.

If you want to max out your Social Security benefits, the classic wisdom is to wait as long as possible to file your claim. For each year that you wait beyond full retirement age your monthly checks can grow by about 8 percent. Of course, some people actually choose to (or need to) claim benefits before their full retirement age, and their checks are reduced by as much as 25 percent.

Not to throw another complication into the picture, but we also know that sometimes things don’t go according to plan. That might best be illustrated by these statistics* regarding current retirees:

  • 34.5% of men and 39.7% of women filed for benefits at age 62
  • 22.4% of men and 23.8% of women filed for benefits between ages 63 and 65
  • 33.9% of men and 27.5 % of women filed for benefits at age 66
  • 7.1% of men and 5.7% of women filed for benefits between ages 67 and 69
  • 2% of men and 3.3% of women waited until age 70 to file for their benefits

As you can see, some beneficiaries did manage to wait until after their full retirement age, even up to age 70, before filing their claims. But those situations are not very common. We can’t be sure of the reasons behind each person’s choice, but it’s probably safe to say that some were unable to wait, and claim a larger monthly check, due to circumstances beyond their control.

The point we’re trying to make is that reality doesn’t always fall in line with our plans. And while your Plan A might include waiting as long as possible to claim Social Security, you should also have a Plan B. Give us a call and we can discuss ways to create a fluid and flexible retirement plan, that can change along with your situation. That way, you never have to depend too heavily upon Social Security to fund your retirement.

*Stats from Social Security Administration, 2016