There Are 567 Calculations To Help You Optimize Social Security. A Financial Advisor Can Help You Make Sense of It

There’s a reason Social Security is such an important income stream for so many retired Americans.

For one thing, a lot of people don’t manage to save very much for retirement. And without a sizable nest egg, those benefits become their primary means of paying for expenses.

Also, Social Security is guaranteed to last for life. The same can’t be said for anyone’s savings.

That’s why it’s so important to file for Social Security strategically. Although your wage history will help determine what monthly benefit you get, your filing age will play a role as well.

But the decision to file for benefits may be tricker than you’d expect. Believe it or not, there are actually 567 different sets of calculations you can use to determine how and when to apply for Social Security. Yikes.

If you’re struggling with that decision, there’s one key move you ought to make.

Why your Social Security timing is so important

Let’s assume you’ll be pretty reliant on Social Security for retirement income. In that case, you should know that there’s a huge difference between filing early, on time, or late.

The earliest age you can claim Social Security is 62. Filing on time, meanwhile, means signing up for benefits at full retirement age (FRA), which is 67 if you were born in 1960 or later. You can also delay your Social Security claim past FRA for boosted benefits up until your 70th birthday.

So in a nutshell, if you’re eligible for $2,000 a month in Social Security at an FRA of 67, filing at 62 will give you $1,400 a month instead, and filing at 70 will give you $2,480.

These aren’t the only combinations, since you could also file at age 65, or 68, or 68 and 1/2. But the gist of it is that filing early will reduce your benefits on a monthly basis and filing late will increase them.

There’s more to consider than that, though. Claiming Social Security at 70 isn’t automatically your smartest choice even though it results in larger monthly benefits. If you don’t end up living a very long life, you could lose out on total income despite boosting your checks monthly.

Filing early isn’t necessarily a poor choice, either. Doing so could leave you with more lifetime Social Security income if you don’t end up living very long. Or, it could benefit you in another way — for example, by giving you seed money to start a business that proves lucrative during your senior years.

And then there are spousal needs to consider if you’re married. Filing for Social Security early won’t only impact your monthly checks — it’ll also impact whatever survivor benefits your spouse is entitled to. Filing late may result in larger survivor benefits but force your spouse to wait on spousal benefits. It could be a very complicated situation that’s tough to navigate on your own.

A financial advisor can help

Since there’s clearly a lot riding on your Social Security filing decision, and it isn’t an easy decision to make, a good bet is to consult a financial advisor for guidance on claiming benefits. A financial advisor can not only help you understand what filing options are available to you, but help you choose the right one based on factors that include your:

• Income needs
• Savings level
• Portfolio makeup
• Retirement goals
• Marital status
• Health

This isn’t to say that you can’t make the decision on your own, since many people do. But a financial advisor may be able to point out different factors you wouldn’t think to consider yourself when making your choice.

Remember, Social Security may be the only retirement income stream you have access to that’s guaranteed to never run out. So it’s very important to get your filing decision right. A financial advisor could help you approach that decision with more confidence, so it’s worth sitting down with a professional and having them weigh in.