Social Security Savings Trick: Wait to Take Your Full Benefits

NJ & NY divorce lawyer Paul Goldhamer, Esq. is a founding partner at Kantrowitz, Goldhamer & Graifman. In addition to practicing estate and matrimonial law, Mr. Goldhamer maintains a crowded schedule of lecturing, teaching, and doing media outreach. Among numerous accomplishments, he helped to establish free legal seminars for the public in the Tri-State area. Mr. Goldhamer was honored by Superlawyers.com as a “Super Lawyer” in 2014.

From Paul Goldhamer, Esq.:

A word about when you should take your Social Security. You can take your Social Security at Full Retirement Age (FRA)  at if you were born:

Year                       Age
1937 or earlier        65
1938                       65 and 2 months
1939                       65 and 4 months
1940                       65 and 6 months
1941                       65 and 8 months
1942                       65 and 10 months
1943-1954              66
1955                       66 and 2 months
1956                       66 and 4 months
1957                       66 and 6 months
1958                       66 and 8 months
1959                       66 and 10 months
1960 and later        67

But here’s a great savings trick. If you don’t take your full retirement at age Full Retirement Age (66 for most of us approaching retirement) and wait one year, you will get 8% more in Social Security Benefits, tax deferred. If you wait the maximum allowed four years, until age 70 (you must take it at age 70), you will get an additional 32% each year, thereafter.

People always think they won’t live long enough to gain a benefit from waiting. However, the Social Security Administration and many others have studied this belief of dying early and have discovered that 93% of people live substantially longer than they predict.

If you delay taking Social Security for 4 years you will lose 100% of your benefit for the 4 years or 400% of 1 year’s Social Security payment. But, if you live to be 82 ½ ,  you
will make up the 400%. From the time you’re 70,  you will be paid 32% more each and every year you survive (or your spouse survives). Remember, when you die,  your spouse will receive your higher Social Security benefit.  Therefore,  if one or the other of you survive more than 12 ½  years to age 82 and six months, you will be ahead on the investment. Further, if you have a disabled child who’s collecting Social Security on your Social Security benefit, the child will receive the higher amount for the rest of their life.

In actuality, the benefit is 8%  more per year for the rest of your (or your spouse’s) life, once payments commence. If you think you need the money, you are better off taking money from your savings to live until you are 70. Very few people can successfully invest and make 8% every year. The S&P 500 this year so far is at 5% … and that is taxable.