Meet Harry and Mary

They are eligible to file for Social Security.

They are confused. They have read about different strategies and have spoken with friends to find out what they did. Finally, they decided to obtain assistance on how to optimize their Social Security claiming strategy.

They will be filing under the new rules created by the Balanced Budget Act.

Harry was born 01/02/1954. At full retirement age his primary insurance amount will be $2,500. Mary was born 12/02/1957. At full retirement her primary insurance amount will be $1,500.
Harry’s life expectancy is 87 while Mary’s is 91.

Following a Social Security software planning analysis, if Harry files at age 70, he will receive $3,849/month while Mary files at age 68 and receives $1,959/month. The software shows they will gain more than $123,000 using this strategy than filing at full retirement age.

There are some “ifs” to consider. What happens if Harry dies before he reaches his break-even age? What happens if Mary lives beyond age 91? Is there an effective alternate strategy for them to consider?

An alternate strategy has Harry filing at age 70 when he will receive $3,849/month while Mary files at age 65 when she receives $1,458/month. Harry could file at full retirement age and f he died at age78 then Mary would need to consume more of their assets to replace the shortfall from Social Security.

Since longevity is the biggest risk to face in old age, it is important to take Social Security for at least one of the spouses at age 70. The return on Social Security as an annuity that is inflation protected is enormous. Taking Social Security early and trying to beat the annuity payout by gains in the stock market is a fools game.