Timing your Social Security filing: Where to get assistance with the big decision

Deciding when to file for Social Security is one of the most consequential financial decisions most Americans will make about their retirement. Opting to claim benefits early, at the Full Retirement Age (FRA), or later can mean hundreds of thousands of dollars in higher–or lower–lifetime benefits for a married couple.

But Social Security’s rules are complex, so most of us could use some guidance. Yet, help can be difficult to find. Social Security Administration (SSA) staffers can only give you general information about benefit options–they are prohibited as a matter of agency policy from advising you one way or the other about claiming strategy. Some SSA staffers give advice anyway–although I hear frequently from readers who complain they’ve been given incorrect information from staffers who are misinformed about some of the program’s more complex rules and options.

Fortunately, there are alternatives. A growing number of financial planners are learning the Social Security ropes, and several companies have sprung up that can help you craft a personalized filing strategy for a fee. A variety of robust, free online tools also can help do-it-yourselfers.

The Starting Point

No matter where you seek help, the baseline information you’ll need is contained in the annual statement that the SSA prepares for you. The statement tells you how much you can expect to receive if you file at your FRA, at age 70, or at age 62. The statement also contains a record of your annual earnings that were subject to Social Security (and Medicare) taxes–and that’s worth checking annually to make sure the latest numbers are accurate, since benefits are determined using a formula that considers your 35 highest-earning years. (If you find an error, contact the SSA at 800-772-1213, or visit your local SSA office; bring along your statement and paperwork supporting your claim of higher income.)

The SSA stopped mailing out paper statements in 2011, but it will resume mailings starting in September of this year for some workers. However, you can always access your statement–and download it as a PDF–by creating a My Social Security account on the SSA website.

It’s also worth knowing your FRA, since it’s the claiming age from which benefits are adjusted higher or lower. A package of Social Security reforms implemented in 1983 set in motion a gradual increase in FRA from 65 to 67, based on year of birth. If you were born in 1960 or later, your FRA is 67; for everyone else, the number is somewhere in between. The Social Security statement tells you this–but only parenthetically in the line on Page 2 that reports your benefits at various ages. More information on FRA is available in this handy chart at the SSA website.

Advice From Planners

A growing number of financial planners are learning to advise clients on Social Security claiming–but don’t assume that your planner is among them.

A 2012 study by the Pension Research Council at University of Pennsylvania’s Wharton School found that planners often focus on the wrong thing when advising clients on Social Security, including worries that political gridlock will lead to benefit cuts when the program’s trust fund is exhausted in 2034. Issues like that aren’t likely to impact people who are close to claiming benefits–and in my view, it’s highly unlikely that Congress will allow benefits to be cut at all.

Click for more . . .

Pages: 1 2