When you’re single and nearing retirement, making the most of your Social Security benefits is crucial to securing your financial future. While married couples have the opportunity to strategize around spousal benefits, singles have fewer options but still plenty of ways to maximize their retirement income.
The Importance of Timing Your Social Security Claim
For singles, claiming Social Security early, at age 62, may seem appealing, but it can result in long-term financial loss. By filing before your full retirement age (which ranges from 66 to 67, depending on your birth year), your monthly benefit will be reduced to account for the additional years you’ll receive payments. This reduction could significantly impact your future financial security, especially if you’re without a spouse or children who could provide support in your later years.
For singles who lack a support network, the risks of early Social Security claiming are higher. They may find themselves moving into assisted living facilities sooner than expected, leading to increased healthcare costs. To mitigate this, delaying benefits until at least full retirement age ensures that you receive 100% of your monthly benefit, which can help protect your financial security over the long run.
Strategies to Maximize Your Benefits
One of the most effective strategies for singles looking to maximize their Social Security income is to delay claiming until after full retirement age. By waiting until age 70, you can increase your monthly benefit by 8% each year. This strategy allows you to collect larger payouts over your lifetime, which can be a game-changer, especially for those who may not have saved enough for retirement.
For women, in particular, delaying Social Security until age 70 can be beneficial. Women tend to live longer than men, and waiting to claim benefits can provide a higher lifetime income. The average life expectancy for a woman who reaches 65 today is 86.7 years, while for men, it’s 84.1 years. Given that many people live well past average life expectancy, delaying benefits can offer significant long-term financial advantages.
However, filing early may still make sense for some individuals. If you have health concerns, a shorter life expectancy, or urgent financial needs, filing early might be the better option. You can use tools like the American Academy of Actuaries’ longevity calculator to estimate your life expectancy, but remember that these tools don’t take into account factors like the time value of money or investment opportunities.
The Three Social Security Filing Options for Singles
Singles have three primary options for filing for Social Security:
- Claim benefits early at age 62: While this option gives you access to benefits sooner, it results in a permanent reduction in your monthly payment.
- Wait until full retirement age: Filing at full retirement age allows you to receive 100% of your monthly benefit. This option is ideal if you want to avoid reductions in your benefits but are willing to wait a few more years to start collecting.
- Delay benefits until age 70: By delaying your claim, you can increase your monthly benefit by 8% per year. This strategy is perfect for those who can afford to wait and want to maximize their long-term income.
Each of these options affects your total lifetime benefits. For example, let’s look at a hypothetical case: Michelle, born in 1958, has a full retirement age of 66 and 8 months, and her monthly benefit at that age is $2,400. If Michelle claims benefits at age 62 and lives to 95, she will receive over $200,000 less in lifetime benefits compared to waiting until full retirement age, and nearly $375,000 less than if she had waited until age 70.
Making the Right Choice for Your Future
Social Security is one of the few sources of guaranteed income in retirement, so it’s crucial to carefully consider when to start collecting. To make the best decision for your unique situation, it’s wise to consult with the Social Security Administration or a financial professional. They can help you compare different filing strategies and scenarios, ensuring that you choose the option that will best support your long-term financial goals.
