Married Men Take Social Security Benefits Too Early

July 19, 2010 | By Steven DiGregorio

 Most people typically begin to receive Social Security (SS) benefits between ages 62 and 70.  The most common scenario involves a married couple where the husband is both older and the higher income earner.  Once payments begin, they will continue until the end of the surviving spouse’s life.  In these cases, the couple would be benefited by considering the alternatives before making that decision.


Most married men usually claim SS benefits at age 62 or 63, despite the fact that their family’s overall expected lifetime income would be as much as 130% greater than the standard benefit if they merely waited a few years. Typically, the longer an individual waits to claim SS benefits the larger his or her monthly payment will be. This is the result of an actuarial calculation that takes into consideration the delayed commencement of benefits and life expectancy of the recipient.

Those most adversely affected by an early claim of SS benefits are the wives who outlive their husbands. While men who begin taking benefits at age 62 lose about 4% of the annual income they could have expected to receive if they had not started early, a surviving spouse typically receives a survivor’s benefit that is 20% less than it would have been!

So why do men generally begin taking SS benefits at age 62 or 63 even though it’s usually not in their family’s best interest to do so? A recent study by the Center for Retirement Research at Boston College examined this question, with surprising results. While it might be assumed that men are more likely to claim early because they need the money, the study found that wealth makes little difference in when benefits are claimed. Men without a lot of savings often claim early because they need the money to live on, but wealthy men often claim early too, because they want to leave their children an inheritance and they prefer to live on SS benefits instead of spending down other assets that could otherwise be passed along to their children.

Either way, a more informed decision could mean money in the bank!  If leaving heirs an inheritance is the goal, there are more efficient ways to pass assets to the next generation.  A Roth IRA is an extraordinary alternative.  Reasons, 1) A Roth IRA has no required minimum distributions (RMDs) during the owner’s lifetime and 2) The designated beneficiary generally can withdraw it over his or her own life expectancy. This means, a 40-year-old beneficiary who inherits the Roth can take income over approximately 43 years. With no RMDs during the owner’s life and the extended time the beneficiary has to withdraw it, there should be ample time to generate meaningful growth to pass on to heirs, income tax-free!

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The author of this blog, Steven M DiGregorio is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC a Federally Registered Investment Advisory Firm.  Securities offered through an affilliated company Spire Securities, LLC a Registered Broker/Dealer and member FINRA/SIPC.


Tags: beneficiaries, beneficiary, financial planning, medicare, retirement, retirement income, Retirement Planning, social security

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STEVEN M DIGREGORIO is President of Compass Asset Management Group, LLC and an Investment Advisor Representative with Spire Wealth Management, LLC.
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