A reader poses a question that’s trickier than it seems.
One of the things I think I’m pretty good at is answering questions about federal retirement, but a recent email about Social Security left me stumped—twice.
Greg, a longtime federal employee, wrote to me:
Social Security benefits max out at age 70, I get that. But filing too soon loses a portion of the maximum amount, and filing too late loses a whole monthly benefit. I have searched all over, and nowhere can I find out exactly what the best date is to request benefits begin. … My wife reaches age 70 in the middle of April and we were wondering how to maximize her benefit by selecting the best starting date.
I thought Greg was asking a very common question: When is the best time to file for Social Security retirement? So I replied as follows:
There are a lot of theories about claiming Social Security benefits. Social Security has a fact sheet on this question as well. There are many factors that can influence the best time for you:
- Are you married or single?
- What is the age difference between you and spouse, if married.
- What is the income difference between you and your spouse, if married.
- Do you have children age 18 or younger?
- Are you widowed?
- Are you still working or fully retired?
- Do you have other sources of retirement income that could bridge the time between retirement and a later application for Social Security?
- Do you have good health and family history that shows longevity?
My response was frustrating for Greg, because it didn’t answer the question he actually was asking. So he tried again:
But the basic question—which is not answered anywhere on Social Security’s website or anywhere in your published columns—is how to answer the question in the online application that says, “When do you want your benefits to begin?” The choices are limited to months, not dates. If the birthday month for age 70 is selected, the first half of the month is age 69 and only the second half of the month is age 70. So does selecting the birthday month for benefits to begin result in a calculation of “age 69 benefits” or “age 70 benefits?” If the former, then I would want to select the month AFTER the age 70 birthday month. Here’s the problem: If I guess wrong (or if SSA gives me the wrong information) then either I get a lower benefit for life by going too early or I miss out on a full month of benefit by going too late. With so many experts out there saying that waiting until age 70 is an option, I can’t believe this question hasn’t been asked before and answered.
Believe it or not, I still didn’t understand the question. Here’s my second response to what I thought he was asking:
Once you have applied, it could take up to three months to receive your first benefit payment. Social Security benefits are paid monthly, starting in the month after the birthday at which you attain full retirement age (which is currently 66 and will gradually rise to 67 over the next several years). Generally, the day of the month you receive your benefit depends on your birthday, or that of the person on whose record you're collecting benefits:
- If the birthday is between the 1st and the 10th of the month, you will receive your first payment on the second Wednesday of the month after that birthday.
- If the birthday is between the 11th and the 20th, you will receive your payment on the third Wednesday of the following month.
- If the birthday is between the 21st and the end of the month, you will receive your payment on the fourth Wednesday of the following month.
If your payment date falls on a federal holiday or weekend, you can expect to receive that month’s payment on the weekday immediately prior. Social Security does not make partial-month payments. Individuals first become eligible to receive a benefit during the month after the month of their 62nd birthday. So, someone born in May becomes eligible in June. Since Social Security pays individuals a month behind, the person will receive the June benefit in July.
If you would like to receive your first payment in the first month you are eligible, you will need to apply three months before your birthday.
This was still not the answer Greg was looking for. So he and his wife turned to the experienced and knowledgeable employees at the Social Security Administration, who were finally able to address his question. Here’s what they said:
If you want to maximize your monthly payment—which means you want to collect the largest possible number of delayed retirement credits—then you want to specify in the application that benefits should begin in the month that you turn 70. For example, let’s say that you turn 70 on Aug. 15. You may request that your benefit begin in August with the first payment in September. By requesting that your benefit begin in your birthday month, you will receive the maximum possible monthly payment for the rest of your life. Delaying your benefit until September (with payment in October) will not give you any additional retirement credit, and the monthly payment will still be the same as if your benefit begins in August, so all you are doing is giving away one monthly payment for no reason. However, if you request that your benefit begin prior to August, you will get an extra monthly payment, but the amount will be slightly lower and it will stay that way for the rest of your life, except for COLA adjustments.
The decision on when to apply for retirement benefits is a personal choice, and the trade-off in waiting as long as possible is a higher monthly payment. If you make a conscious decision to wait until age 70 in order to maximize that monthly payment, then knowing when the benefit should begin is key, since too early will reduce your lifetime payments, and too late will inadvertently give up a month’s payment at the maximum amount. One month of Social Security benefits at age 70 could be several thousand dollars, so it is an important tip to be aware of!
There is one exception to the above strategy: If your birthday falls on the 1st day of the month, then you will want to request your retirement benefit begin in the month PRIOR to your birthday, as Social Security considers your birthday to begin in the month of the day before your birthday. So someone who turns 70 on August 1 should ask for the retirement benefit to begin in July.
Thanks for your patience, Greg, and for sharing this valuable tip for others to benefit from.