Life Care Planning Timing the claiming of Social Security

By Sandra W. Reed
Sandra Reed

Jane, age 68, is single and working as a health care worker. She had planned to continue working and postpone claiming Social Security benefits to age 70 to receive the maximum monthly benefit. Her work exposes her to COVID-19 daily. Should she rethink her decision?

Calculating the cost of not taking SS benefits until age 70

Jane’s monthly benefit from SS will depend upon her average indexed monthly earnings (AIME). This is determined by averaging her 35 highest earning years, adjusted for inflation, and dividing this figure by 12. From this SS determines the primary insurance amount by applying a formula. Jane is entitled to the maximum full retirement benefit now, which for 2021 is $3,113.00. If she were 70 in 2021, her benefit would be $3,895.

Each year SS benefits are adjusted for inflation, so to get an exact benefit two years from now would require a computer program. But, for simplicity’s sake, assume the difference in today’s benefit and that two years from now is $800 per month. Foregoing benefits for two years “costs” $3,113 times 24 months or $74,712. Dividing $74,712 by $800 is 93.39, the number of months Jane must live to break even with what she would earn taking benefits at age 68. If Jane lives 7.78 years (93.39 ÷ 12), she is better off financially by waiting.

Factoring in life expectancy

Based on the Social Security Life Expectancy Tables, Jane has a life expectancy of 19 years. If Jane takes SS now and lives 19 years, her total benefit at that level would be $709,764. If she waits until 70 to take SS and lives 17 years longer, her total benefit at that level would be $794,580. This could mean an extra $84,816 over her lifetime.

Making the decision to delay or not is complicated

The life expectancy tables don’t consider family history, any underlying health conditions, or occupational hazards. Jane must examine these factors in making her decision. She has no underlying health conditions, both her parents lived into their nineties and her grandparents were long-lived. Her risk is her occupation.

If Jane delays taking SS retirement until age 70, she might contract coronavirus and die before taking any benefits at all zero. On the other hand, if she retires from her work and takes the lesser benefits, she will likely be increasing her chances of living her full life expectancy.

Sandra W. Reed practices Elder Law in Somervell County, handling probating of estates, drafting of wills, trusts, powers of attorney and deeds as well as estate and Medicaid planning.  She lives in beautiful Chalk Mountain and can be reached at (254) 797-0211; (817) 946-2809 or at