Financial advisors generally recommend that the receipt of Social Security benefits should be delayed as long as possible into the age 62-to-70 benefit commencement window. This is particularly the case if a person has sufficient income to afford his or her lifestyle pending the receipt of benefits, and there are no significant health concerns driving an earlier start.
Strategically, delaying makes sense because Social Security benefits incrementally increase for each month the taking of benefits is deferred. These “delayed retirement credits” are not insignificant. Annual benefits for those born after 1943 increase at the rate of 8% per year. Cost of living adjustments (“COLA’s) tied to the receipt of benefits are also increased for each year that one defers the taking of those benefits.
If income security for a married couple is important, delaying Social Security benefits makes sense for a high wage earner, because if the high wage earner dies, the surviving spouse is entitled to a survivorship benefit calculated on the wage earner’s historical receipt of income (including the previously mentioned delayed retirement credits). So, delaying the receipt of benefits can be used to effectively increase the Social Security benefit stream payable to a surviving spouse.
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