Why I'm not collecting Social Security benefits - yet!

I just turned 62 and of course I am thinking about how I could now collect Social Security benefits.  I am mostly retired so my income is not much higher than the annual earnings limit ($14,160 in 2011) for those who haven't yet received full retirement age.  That means that the income subject to the penalty of $1 in benefits deducted for each $2 in earnings is small.  We are fortunate that my husband works full time and we are able to meet all of our financial obligations without my collecting Social Security.


However, I was very curious about the impact of starting benefits at different ages on my potential lifetime benefits.  The NY Times recently had an article "When to Collect Social Security? A New Calculator" which mentioned a new program created by two economics professors that provides a free report which generates the optimal age when you, and your spouse, should begin collecting benefits.  So I went to SocialSecurityChoices.com and completed the form.  All I needed was our most recent Social Security Statements so I could provide the estimated payment at full retirement age for my husband and myself.  Less than an hour later the report arrived via email.

The results were very interesting.  I looked at the long planning horizon scenario as the most likely as we have long lived parents.  Note that my husband is three years younger than I am so our scenario reflects that.

It suggested (based on our data; yours would be different) that to obtain optimal benefits, the following steps should be followed: First, the wife files for retirement benefits and immediately suspends them at age 69, year 2018.  Next, provided the husband has reached full retirement age and the wife has already filed and suspended, the husband files for a spousal benefit on the wife’s record at age 66, year 2018. The husband should be careful to apply for the spousal benefit only, and not for his own retirement benefits at this time. Then, the wife files for and begins to receive retirement benefits at age 70, year 2019. Last, the husband files for and begins to receive retirement benefits at age 70, year 2022.

Who knew this scenario was even an option?  This report provided ideas I hadn't thought about and I need to learn more about how this would work, but we have time unless our financial situation or Social Security rules change drastically.