Social Security tips for singles

Figuring out when and how to take Social Security can be a complicated decision, and there are no one-size-fits-all answers. What’s more, much of the advice about Social Security assumes you are married—and married couples often have something of an advantage, since there are strategies that play off each spouse’s ability to claim or delay benefits.

But what if you’re on your own? Perhaps you’re widowed, or divorced, or simply never married. If so, you’re hardly alone: 44% of women aged 65 to 74 and 22% of men are single, and those proportions rise sharply as people age. If you’re in that camp, here are some strategies to consider to help make the most of your Social Security benefits.

The value of waiting

First, some basics: You can start taking Social Security, receiving reduced benefits, when you reach age 62, rather than waiting until your full retirement age (FRA). FRA ranges from 65 to 67, depending on when you were born.

If you take benefits before you reach FRA, Social Security will reduce your payments. If you delay collecting until after you reach FRA, the amount of your monthly benefit will increase until you reach age 70. Imagine, for example, a woman whose full retirement age is 66, and who is eligible to get $1,500 a month at age 62. If she waits until FRA to collect, she would get 33% more, or $2,000 a month. And if she waits until 70, her benefits will soar another 32%, to $2,640 a month. (Note: All figures are in today's dollars and before tax; the actual benefit would be adjusted for inflation and possibly subject to income tax.)

Generally, the longer you delay taking Social Security, the higher your lifetime total of benefits may be, and the gains from waiting can often be significant. In the above example, the woman’s lifetime benefits would be more than $36,000 greater—after taxes, and adjusting for inflation—if she waited until age 70 to collect benefits and then lived to age 89.

That’s a big difference, and millions of Americans could help ensure themselves brighter financial futures simply by hitting the pause button on Social Security for a few years. Of course, if you wait to collect, you may not live long enough to enjoy the added value of increased payments. Since no one knows when he or she will die, you need to make some reasonable assumptions about your lifespan, based on your health and family history.

Find your own strategy

But your goal shouldn’t simply be to maximize your Social Security benefits in isolation; you should strive to maximize your total retirement income. Social Security isn’t just a check that arrives once a month; it’s an income-producing, inflation-protected component of your overall portfolio. Delaying your benefits will boost your monthly payments and hopefully your total income stream later on. But if you wait to age 70, you may have one less way to replace your former income as you start retirement. And that means you need to carefully align your other sources of cash, such as pensions, annuities, and investment portfolio, with your expenses. Otherwise, going without Social Security could leave you withdrawing from your other assets more quickly than you should—an especially acute problem during times of poor market performance.

The higher your expenses, the sooner you may need Social Security as replacement income. But you need to chart your income and expenses across various scenarios to determine when it’s best to bring Social Security onto your personal ledger.

If you’re divorced

There are a few things to keep in mind if you have been married in the past, but aren’t today. If you are divorced or getting divorced, one key factor to keep in mind is the “10-year rule.” You are eligible to collect spousal benefits from Social Security based on your ex-spouse’s earnings history if you were married for at least 10 years and are unmarried today. These payments are equal to 50% of your spouse’s benefits if you start collecting at full retirement age, less if you take Social Security early. So just because you’re no longer married to a former spouse doesn’t mean his or her work record stops giving your retirement a boost.

Your benefits won’t have any impact on your former spouse; the fact that you collect Social Security will not affect payments to your ex, or to any new family he or she may have started.

If you are widowed

If you are a widow or widower, you are eligible to collect your former spouse’s Social Security payments as a survivor benefit. Again, if you wait until FRA to take them, you can get 100% of that benefit, less if you collect early. (The rules about how much less are different for survivor benefits than for regular Social Security; get the details.) And you can take whichever payment is larger: a monthly check based on your own work history, or the survivor’s benefit.

But you don’t have to make one permanent choice. There are two strategies worth considering. First, you can claim a survivor’s benefit now, let the amount of your own payments grow, and then switch to claiming your benefits later. This may work best if you’re under age 70 (since your own payments will only increase until you’re 70) and have a relatively high benefit at FRA compared with your former spouse.

Finally, you can claim survivor benefits if your ex-husband or ex-wife dies, as long as your marriage lasted 10 years or longer. These rules are complex, however, especially if there’s any possibility that you could marry again. So it’s always wise to consult the Social Security Administration (800-772-1213).

https://guidance.fidelity.com/viewpoints/social-security-tips-for-singles