Archives for June 13, 2018

Free Social Security Tool for Optimal Benefit Claiming Strategy

socialsecuritycardWhen to start claiming Social Security to maximize your potential benefit can be a complicated question, especially for couples. Two reputable services in the space, Social Security Solutions (aka SS Analyzer) and Maximize My Social Security cost between $20 and $250 a pop, depending on included features.

Mike Piper of Oblivious Investor has created a free, open-source calculator called Open Social Security. To use the calculator, you will need to your Primary Insurance Amount (PIA). This amount depends on your future income, so I would first consult this other free Social Security benefit estimator tool to more easily estimate your PIA. I believe the value you see at SSA.gov assumes that you will keep working at your historical average income until your claiming age (which won’t be the case for us).

Here are our results as a couple, assuming we were the same age (we are close) and with my expected benefit being slightly higher than hers:

The strategy that maximizes the total dollars you can be expected to spend over your lifetimes is as follows:

You file for your retirement benefit to begin 12/2047, at age 70 and 0 months.
Your spouse files for his/her retirement benefit to begin 4/2040, at age 62 and 4 months.

The present value of this proposed solution would be $657,749.

Basically, the tool says that my wife should apply as soon as possible, while I should claim as late as possible. I believe this is because this scenario allows us claim at least some income starting from 62, and if I die first after that, my wife would still be able to “upgrade” to my higher benefit.

The tool might take some time to run the calculations, depending on your browser. You can learn more and provide feedback at Bogleheads and Github.

I am not a Social Security expert, and I have not examined the source code or verified the accuracy of the results. I am inclined to trust the results as Mr. Piper does seem to be an expert on the subject. If I were close to 62, I would probably also use the paid services for a second and third opinion. Why? Spending $100 now could save you many thousands in the future. You may learn about concepts like “file-and-suspend” and “restricted applications”.

The best thing about this free tool is that it can introduce a lot of people to ideas that they would have not otherwise considered. Even if it lacks every bell or whistle, being free means it can help more people. Many spouses wouldn’t think of having one claim as early as possible (age 62), and then have the other claim as late as possible (age 70). It’s not common sense unless you understand the inner workings of Social Security.