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Very interesting article from Market Watch I recommend everyone check out.
Basically comes down to the conclusion that if you wait until age 70 to begin collecting on social security, your total payout over a 30-year retirement span could be substantially larger, potentially tens of thousands more. This is the strategy to use of everyone that lost out after File and Suspend ended, under this scenario -
If you and your spouse were born on or before Jan. 1, 1954 — meaning you are both 62 years of age or older as of Jan. 1, 2016 — and both qualify for social security benefits this strategy could work for you.
I was under the impression that you get a certain allotment. And that whenever you retire, you can either just take that money earlier, and get less monthly. Or take it later, and get more monthly. But you get the same total no matter what.
Turns it, doesn't seem to be the case. Works more on percentages.
Article above lays out a very realistic example of how vastly different your total payout could be, if you were to use the "restricted application" option, and just wait until age 70 to claim benefits. And while even doing so, collecting on spousal benefits, if you are currently 62 or older.
Goes like this, exert:
Let's look at an example
Jack and Jill are married and just happen to be born on the exact same day. Today is their 66th birthday and they are ready to retire now that they have both reached full retirement age.
Jack is an engineer at a large company and Jill is a schoolteacher at the local high school. Jack has a Social Security benefit of $2,400/month and Jill's is $2,000/month.
Their initial plan was to claim their full benefits as is and call it a day, but see how this strategy would boost their retirement income.
If they claim their full benefits, they would receive $4,400/month (or $57,600/year). For the remainder of their retirement, they would continue to receive $4,400/month.
But what happens if Jack uses "restricted application" to delay his benefits until 70 and claim his spousal benefit (which is 50% of Jill's full benefit) instead? In the short term, Jack and Jill will earn less. But once Jack turns 70, he will now begin to claim his own Social Security benefit that has now increased to $3,168/month meaning the couple will now earn $5,128/month.
That means Jack and Jill will be earning an extra $9,216 every single year.
Seeing as how many retirees are living much longer than they used to, this makes a significant difference over a 30-year retirement.
The "restricted application" strategy wont produce more total income until the 12th year of retirement, but over 30 years winds up producing $172,416 of additional income.
Additionally, if we assume that Jill is going to outlive Jack, this also increases the survivor benefit for Jill meaning she will continue to $5,128/month as a widow.
Anyone working under a scenario where this doesn't make sense? I know it isn't always possible to hold off 4 extra years to starting getting those checks.. but man if you do, it certainly pays off down the road.