Q. I will be eligible for full SS benefits at age 66. I plan to keep working until age 70. What are the pros and cons of drawing Social Security benefits beginning at age 66, while still working full time, versus waiting until age 70 to begin SS benefits?
A. Personal health and economic issues may suggest the most advantageous time to begin Social Security, but on an actuarial basis, there is no “best” time to begin benefits. Early retirees receive smaller benefits for more years. Late retirees receive higher benefits for fewer years. Considering the time value of money and average life expectancy, a retiree receives roughly the same dollar total whether retirement begins at age 62, age 70 or any month in between.
A major difference in early and late retirement is the benefit paid to a surviving spouse. A special provision of Social Security law protects the widow/er of an age-62 retiree by guaranteeing the survivor the greater of his or her own benefit or a minimum of 82.5 percent of the deceased wage earner’s benefit if the survivor is at least 62 when widower benefits begin. Other than this special provision, the widow/er receives the benefit the deceased spouse would receive if still alive.
The low earner spouse in a married couple receives the greater of his or her own benefit or 50 percent of the major wage earner’s Primary Insurance Amount (PIA). The PIA is the benefit calculated as of the wage earner’s full retirement age. Wage earner benefits and spouse benefits are each reduced if benefits begin before full retirement age. If a spousal benefit is payable, benefits to a couple are maximized if the major wage earner applies for benefits at or after full retirement age whether or not the low earner spouse begins benefits early. There is no advantage to beginning a spouse benefit later than full retirement age as a spouse does not share in delayed retirement credits while both husband and wife are alive.
If your spouse will receive benefits based on your earnings record and you wish to earn delayed retirement credits so as to provide the maximum survivor benefits, the best option is for you to apply for your own benefit at your full retirement age or, if later, when your spouse becomes eligible for a benefit. You could then suspend receipt of your own benefit and it would continue to increase until you reached age 70.