Social Security: One Decision, a Lifetime of Benefits

Why It Matters:

  • In 2017 some 42 million Americans received Social Security benefits.
  • When you file matters. Early filing means a reduced monthly benefit, while waiting can increase the size of the monthly check.
  • Knowing the rules about how Social Security benefits interact with earned income and pensions in retirement can help you visualize a more complete picture.

Chase Squires tkc.profilePicture Written by: Chase Squires | Transamerica
Aug. 21, 2019

5 Min readClock Icon

Want to “maximize” your Social Security benefits? That’s easy, never die and keep collecting a monthly check.

In truth, there’s no real way to “maximize” benefits because nobody knows exactly how long they will live. But you can consider Social Security claiming options and make informed choices.

Beginning in 2015 lawmakers made adjustments to the federal code eliminating strategies some married couples had used to increase their combined lifetime benefit (we’ll explain one strategy that remains for a limited number of people later). So some of the tips you may have heard of from seasoned retirees may no long apply.

But not all is lost. One thing you can do is file when your benefits are at their fullest potential within the time frame that works for you. Social Security specifically says “Your decision is a personal one” and there is no “best age” to file, just the age that meets your own needs.

To get started, it’s helpful to understand the rules. Key considerations include:

       •   Your filing age.

       •   The impact of working while receiving benefits.

       •   How spousal benefits work.

Your age matters.

You can start claiming Social Security at age 62. Awesome, right? There’s a catch. Your full earned monthly benefit based on your highest 35 years of earned income – called your Primary Insurance Amount – won’t be available until you reach full retirement age (FRA), the age when Social Security says you’re entitled to it. That age has been slowly going up based on year of birth. As an example, the FRA is 67 for someone born in 1960 or after.

Claim earlier than FRA, and your benefit is reduced, and it can be by a lot. Someone with an FRA of 66 who claims at 62 would see their monthly benefit cut by 25% … for life. Those with an FRA of 67 who claim at 62 experience a 30% reduction of monthly benefits.

On the other hand, if circumstances allow, a retiree could wait and not file at FRA. For every year of delay, up to age 70, that full monthly benefit goes up, as much as 8% for each year. Waiting later to file can help create a higher monthly benefit a surviving spouse can “step-up” to after a higher earning spouse dies.

Why is it done this way? Social Security says making the decision to claim early lets you access a smaller monthly check, but potentially for more years. Waiting to claim can increase the monthly benefit, but presumably for fewer years.

Before filing a claim, Social Security suggests you consider a variety of factors such as how long you plan to work, your health, your family’s history of longevity, and income needs.

Working while claiming

If you plan to continue working past age 62 but figure you’ll enhance your income with your Social Security benefit, be aware there are implications. If you’re claiming benefits and you are under your FRA for the entire year, there’s a limit on how much you can make ($17,040 in 2018). After that, the government deducts $1 for every $2 you make. The limit is higher for the year you reach FRA ($45,360 in 2018). And after you reach FRA, there’s no limit, you can earn as much as you want without any reduction in benefits.

Is a pension in the picture?

Some people in special situations who are looking forward to a pension may face reduced Social Security benefits. The Windfall Elimination Provision affects those who earned pensions from employers who didn’t withhold Social Security taxes, such as a government agency.

The ins and outs of spousal benefits

Some individuals who had low-paying jobs throughout their career or didn’t earn enough credits to claim their own Social Security retirement benefit (say, a stay-at-home parent) still have the ability to claim a benefit based on a spouse’s work history. You apply for those benefits as you would your own by contacting Social Security either online, by phone, or in person.

Even if you are divorced, you may be eligible to file on your ex-spouse’s earnings. There are restrictions, including the length of the marriage and current marital status.

Double income couples in special circumstances

As mentioned earlier, Congress tightened some old loopholes that allowed some married couples to increase their lifetime household income using claiming strategies. One strategy remains for couples born before 1954 if both are entitled to Social Security benefits based on their own work record. At FRA one spouse can apply for spousal benefits on the other’s benefits, leaving his or her own benefits to increase until they turn 70, then claim their own enhanced benefit. A financial professional can help you understand if this provision is available and helpful in your case.

Don’t guess, do the math

When you’re looking ahead to your retirement needs and potential income, you don’t have to guess what your Social Security benefits will look like. Social Security offers a calculator that helps you estimate your monthly benefits based on your own, actual reported income over the years. And it can show you how those estimated benefits could be reduced or enhanced, based on when you file. Just remember, that may be subject to income taxes.

For more information, you may want to ask a financial professional, download Transamerica’s free informational kit, a Field Guide to Social Security, or visit Social Security’s helpful site at

Things to Consider:

  • Talk with your financial professional (and your spouse) about a strategy that’s right for you.
  • Think about when you want to file. The Social Security Administration suggests considering your health, your work status, your income needs, and the history of longevity in your family.
  • There are special rules for spouses, even former spouses, which may affect your decisions.



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