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Maximizing payout in the complex realm of Social Security

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Whether you are approaching retirement age or not, it is always a good idea to have a firm understanding of your future Social Security income, a key component of retirement planning.

With more than 2,500 rules governing it, Social Security is an extremely complex system.

To start, it is important to grasp these key terms and ages:

<Full retirement age: Your FRA falls between 65 and 67, depending upon the year of your birth. If you wait to claim benefits until you reach your FRA, you will receive your full primary insurance amount.

<Primary Insurance Amount: This is the monthly benefit you receive if you file for Social Security benefits exactly at your full retirement age. All early or delayed benefits are calculated as a percentage of your primary insurance amount.

<62: The earliest age that you can claim Social Security benefits is 62. If you claim at 62, you receive a reduced benefit of between 70 and 75 percent of your primary insurance amount (since you will be receiving payments for a longer period of time).

If you file between 62 and your full retirement age, your reduction is calculated as a fraction of a percent for every month remaining before you reach your FRA.

<70: For every month you delay claiming benefits beyond your FRA, you receive delayed retirement credits. These credits are calculated as a fraction of a percent for every month you delay after reaching your FRA.

Delayed retirement credits can amount to as much as an 8 percent benefit increase annually. And one more thing – since you reach your maximum benefit at 70, there’s no reason to delay benefits past then.


The decision about when to file for Social Security benefits should be based on health and life expectancy.

If you live longer than the Social Security Administration expects, you will receive more benefits; if you die earlier, you will receive fewer.

Delaying Social Security benefits can be viewed as a longevity hedge; that is, the longer you live beyond your life expectancy, the more you’ll benefit from delaying.


Delaying benefits can be especially advantageous for couples. If the spouse with the highest benefit delays claiming until 70 and, thereby, maximizes his or her Social Security benefit, it provides cash flow protection for both spouses.

If a husband dies prematurely, for example, his wife generally will be eligible for a widow’s benefit equal to the higher of her benefit or the deceased husband’s benefit.

If the deceased husband had not yet begun collecting benefits, then his deceased spouse benefit is calculated as if he filed for benefits on the date of his death.

For couples who have been married at least a year, the basic spousal benefit is 50 percent of the working spouse’s primary insurance amount if one begins collecting at full retirement age.

A spousal benefit will not accrue delayed retirement credits if one files after FRA, so there is no advantage to delaying spousal benefits after full retirement age.


The future of Social Security is unknown. People now collecting benefits most likely will see their benefits remain intact.

However, those who have not yet filed should run two financial independence projections: one with full Social Security benefits and another with benefits reduced to 77 percent of the projected benefit beginning Jan. 1, 2034.

(This is based on the Social Security Board of Trustee’s report released in July 2017 which predicts SSA’s ability to pay projected benefits.)

In so doing, people can plan for best and worst case scenarios.

Sarah Caine is a financial planning analyst at JoycePayne Partners of Bethlehem and Richmond, Va., responsible for analysis and development of comprehensive financial plans and assisting in their implementation and ongoing execution. She has a registered para-planner designation from the College for Financial Planning and can be reached at scaine@joycepaynepartners.com. 

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