There is no one-size-fits-all age to take Social Security benefits. It is up to you to find the strategy that best aligns with your goals. Image: larry1235/Shutterstock.com
By: Dallen HawsDeciding when to take Social Security is a huge decision that can easily add/deduct $100,000s worth of lifetime benefits from your retirement. The earliest you can begin benefits is at age 62 and the latest you should begin benefits is at age 70.
So, is there a perfect time to start social security as a federal employee? Unfortunately, no. But there are some situations where some strategies work way better than others.
In this article we’ll review all of the best Social Security strategies that Federal Employees should use.
Reasons to Start SS Early
1. Other Income Sources Aren’t Enough
The earliest you can begin Social Security is at age 62. If you simply don’t have sufficient income when you retire, taking social security immediately might be the best decision for you.
As a federal employee you might enjoy the benefits of the TSP and the FERS pension or FERS supplement. If you aren’t sure how much the FERS pension can provide for you in retirement, see Full Retirement for Federal Employees; CSRS, FERS + Supplement, and if you’re wondering about your TSP balance, check this out Have $1.5M in You TSP? Don’t Worry FERS and Social Security Will Make Up for It.
One situation that many people find themselves in is when they are forced to retire before they had planned too. This could have been caused by a disability or a family situation. In these cases, some people will be forced to retire with less pension income than expected and will rely more heavily on their Social Security benefits.
2. Single & Health Issues?
If you are single and have health complications, it might be a good idea to take social security right away to get the most out of the system while you are alive. But the same isn’t true if you are married.
When someone is married, their Social Security decisions directly affect what their spouse can receive while both spouses are alive, and almost more importantly, what benefits the surviving spouse will be left with when one of them passes away. This is why it can often make sense for an ill spouse to delay benefits even if it doesn’t make sense for his own life expectancy.
3. Spouse Is Older And Has Lower Benefits
Social Security has something called spousal benefit. It is the ability for one spouse with no social security or a very low social security benefit to receive half of the living spouse’s social security benefit. For Example: If you (as the higher earner) decide to take social security at age 67 with a $3,000 benefit, your spouse will be able to receive half of your social security as well. So, he or she would get $1,500 in addition to your $3,000 benefit (giving you and your spouse a total of $4,500). This benefit only lasts as long as both spouses are still alive. Once one spouse dies, the bigger social security benefit remains. In this case, the $3,000.
So, if one spouse is older and has no or lower social security benefits, you could think about receiving your social security benefit earlier to get spousal benefits. Make sure you run the math to see if it makes sense for you and your spouse.
4. Minor or Disabled Children at Home
When you have minor or disabled children at home, your spouse and your children may be eligible for Social Security benefits. But for them to receive benefits based on your record, you will have to have filed already. This may be a reason for you to file early because the total benefit paid to you, your spouse, and your children is often much more than your Full Retirement Age benefit.
Again, you will want to run the numbers on your situation to make sure this makes sense for you.
Reasons to Delay SS
1. Great Health
If you have had great health your whole life and expect to live a long time, and you don’t have the need for additional income immediately, you could consider taking social security later.
Here’s a few things to remember:
● Do not delay social security past the age of 70 because your benefit will stop growing at that age.
● There is a break-even point for taking social security at each age that how taking social security at a certain age compares to that of another age. If you would like to check that out, click here.
2. Survivor Benefits For Your Spouse
Along with spousal benefits, there are also survivor benefits with social security. This is when the higher social security benefit between the two spouses, remains with the surviving spouse when one spouse dies.
For example, let’s say ‘spouse 1’ has a benefit of $3,000/month and ‘spouse 2’ has a benefit of $1,500/month. If spouse 2 passes first then spouse 1 is left with their own $3,000/month benefit and spouse 2’s benefit goes away. But if spouse 1 passes first then spouse 2 will inherit spouse 1’s $3,000 benefit amount and spouse 2’s $1,500 benefit will again go away.
Simply put, the higher of the two benefits will be the one to last if one spouse passes away.
Because of survivor benefits, many “higher-earner spouses” decide to delay their social security so the surviving spouse is guaranteed a higher benefit.
3. Still Working & Under 70
If you are in your 60’s and still working, most of the time, I recommend delaying social security.
Since you are still working you probably don’t need the extra income so might as well get the guaranteed increases that come from delaying.
However, if you are 70 or older and still working, you should start your Social Security benefits as there are no benefits of delaying past 70.
Conclusion
There is no one-size-fits-all age to take Social Security benefits. It is up to you to find the strategy that best aligns with your goals.
Feel free to visit our website if you have any questions about federal employee benefits and retirement.
Dallen Haws is a Financial Advisor who is dedicated to helping federal employees live their best life and plan an incredible retirement. He hosts a podcast and YouTube channel all about federal benefits and retirement. You can learn more about him at Haws Federal Advisors.
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