Social Security Filing Options for Singles
Single, childless retirees who have never been married may have fewer strategies available for claiming Social Security benefits than spouses, widows, and divorcees, but no less incentive to maximize their retirement income stream.
Indeed, such singles need not worry about how the timing of their Social Security benefits may impact a surviving spouse or minor children, which motivates many to begin claiming benefits at the earliest opportunity — age 62. But that may not provide the biggest payoff.
Why? Filing for benefits before your full retirement age, which is either age 66 or 67 depending on the year you were born, results in a permanent reduction in the amount of your monthly benefit to compensate for the extra years you will be collecting Social Security.
That reduction can impact single retirees disproportionately if they do not have a spouse, family members, or younger friends they can count on to act as caregivers in the event their health should fail. Indeed, single seniors who lack a support network are sometimes forced to move into assisted living facilities sooner than their peers, which can be costly.
According to the Employee Benefit Research Institute, older singles face higher health costs than couples ($13,355 versus $8,530) for out-of-pocket expenses for home health care, overnight hospital stays and outpatient surgery.1
Those who are healthy and able to work a few extra years can reduce the risk of outliving their savings significantly by waiting until at least their full retirement age to collect Social Security, which would entitle them to 100 percent of their monthly benefit.
Perhaps the biggest opportunity to augment your guaranteed retirement income, however, is to delay your Social Security benefits even longer. The amount of your monthly check will increase by 8 percent per year for each year you delay benefits after your full retirement age until you reach age 70, when delayed retirement credits cease to accrue.
Thus, by resisting the urge to file for benefits early and working a few extra years as you are able, you not only position yourself to save more into your retirement accounts, but also increase the size of your monthly Social Security check down the road — a potential game changer, especially for those who have undersaved.
Women, in particular, who tend to live longer than men, may benefit most from delaying Social Security. Women who reach age 65 today can expect to live, on average, until age 86.6, while men who reach age 65 today can expect to live until age 85.3. Remember, though, that those are merely averages. Roughly 25 percent of 65-year-olds today will live to age 90, and 10 percent will live past age 95.2
A 2019 MassMutual Social Security Pulse Check survey found that many who file for Social Security retirement benefits early or even at their full retirement age later regret not holding out for a bigger benefit. About 30 percent of respondents filed at age 62 or younger, and nearly four out of 10 (38 percent) of them wished they had waited.
Some indicated that they filed when they did because they had undersaved and could not afford to wait, while others needed the monthly income to cover medical bills, a loss of employment, or other unforeseen expense. “This study reveals that many are leaving money on the table that they’re eligible for — and that they could have received for many years to come,” said Mike Fanning, head of MassMutual US. “Planning ahead for the foreseen — and the unforeseen — appears to be the ‘pay it forward’ message from today’s to tomorrow’s retirees.”
Keep in mind, however, that delaying retirement benefits is not the right move for everyone. Singles who do not expect to reach the average life expectancy based on family medical history or due to a life-threatening diagnosis, and those who have immediate financial need, may do well to claim at the earliest opportunity.
Use the Social Security Administration’s life expectancy calculator to estimate your own life expectancy, but keep in mind it does not account for the time value of money. If you do not need your Social Security income to pay the bills, for example, you might be able to invest your retirement benefit and to potentially produce a bigger payout.
Singles have three filing options to consider: They can claim reduced benefits as early as age 62, they can wait to claim their full benefit until their full retirement age, and they can delay Social Security until after their full retirement age to increase their monthly benefit.
Each produces a different outcome in terms of lifetime payout. To illustrate, let’s consider hypothetical Michelle. Michelle was born in 1958, making her full retirement age 66 and 8 months. Her full retirement age benefit currently is $2,400 a month.
If she begins collecting at age 62 and lives to age 95, her cumulative lifetime benefits would be more than $200,000 less than had she waited until her full retirement age, and nearly $375,000 less than had she waited until age 70.
Your own calculation would likely be different, depending on how much you earned, how much you contributed to Social Security, and the age at which you started claiming benefits.
Social Security retirement benefits are one of the few sources of retirement income that are guaranteed to last as long as you live.
Before making a decision about this important benefit, it’s a good idea to learn about the filing options that may be available to you. A Social Security representative can help. In addition, a financial advisor can help you compare potential payout scenarios to help you make a more informed decision.
Shelly Gigante specializes in personal finance issues. Her work has appeared in a variety of publications and news websites. This article originally appeared on the MassMutual Blog.
1 Employee Benefit Research Institute, “Older Singles Face Higher Health Costs Than Couples,” January 21, 2016.
2 Social Security Administration, “Benefits Planner: Life Expectancy.”