Social Security benefits should be optimized

SHEPHERDSTOWN — Every day, more than 10,000 baby boomers become eligible for Social Security benefits. New rules and regulations make it difficult to apply for benefits. In fact, the maze of laws makes applying for benefits a tedious and complicated affair.

Did you know that:

• the earliest age a person can receive benefits is age 62?

• the average or “full” retirement age is between 66 and 67, depending on the year the person was born?

• most individuals will continue working until the full age of retirement to maximize their benefit?

• the basis for calculating benefits is a person’s top 35 years of pay?

• a person needs to work at least 10 years to earn retirement benefits?

• the average monthly retirement benefit is $1,182?

• a divorced person, who was married for at least 10 years, can claim Social Security benefits on the former spouse’s payment history?

• calculating the age when a husband and wife take their own benefits vs. when they take spousal benefits can drastically alter their benefit amount?

• careful planning for some taxpayers has been shown to increase the lifetime value of the benefit for a married couple by more than $300,000?

The Social Security Administration’s website provides some tools for calculating benefits and for applying for Social Security. However, the website does not provide any guidance on how to maximize benefits.

For example, John and Susan, a married couple, have reached the age 62, allowing them to collect on Social Security. In this hypothetical situation, the net present value of their benefits is around $900,000. They both decide to work until age 65.

After consulting with their financial planner, they determine that Susan will collect her Social Security benefits at age 65 while John will take a “spousal benefit” until age 70. At this time, John can begin to collect his own benefits.

Social Security is inflation-adjusted, and by delaying the start of his benefits, John actually increases their amount. By utilizing “spousal benefits” and by delaying the start of their benefits, they have increased the net value to be over $1.2 million, an increase of $300,000.

By consulting with financial advisors, baby boomers can be better prepared to apply for and receive the maximum amount of Social Security benefits available to them.

— Rob Hoxton is the president and CEO of HFI Wealth Management, a leading fee-only investment advisory firm. He can be reached at 304-876-2619 or

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