Mike Piper is the author of the book “Social Security Made Simple[1].” In addition to explaining how Social Security works, he recently created an interactive calculator, Open Social Security[2], to help you figure out when is the best time to claim Social Security benefits.
I test-drove it with some hypothetical cases. I also ran the same cases through another free calculator by Financial Engines[3]. Both calculators offer some advanced options. I left everything at the default settings.
Case 1
This simplest case involves a single person who has never married.
Assumptions: Female, single, never married, born in April 1958. Estimated benefit is $2,500/month at Full Retirement Age.
Open Social Security: Start at age 69 and 4 months.
Financial Engines: Start at age 70.
Although Open Social Security suggested a slightly different starting date, it also shows if she starts at age 70 as suggested by the Financial Engines calculator, the total benefits are only 0.15% less in her lifetime. I wouldn’t lose sleep over whether the best time to start should really be 69 and 4 months or 70. Starting somewhere between 69 and 70 would be good.
Case 2
Case 2 involves a married couple with similar ages and earnings history.
Assumptions: Husband was born in April 1954, wife in April 1957. Estimated benefit is $2,000 a month for both at Full Retirement Age.
Open Social Security: Wife starts at age 62 and 1 month. Husband starts at age 70.
Financial Engines: Wife starts at 65. Husband starts at age 70.
The difference is only in when wife should start. Open Social Security shows having wife start at 65 as opposed to 62 and 1 month reduces the lifetime benefits by 0.8%. Again, because the difference is quite small, I would say both calculators point to the same direction. Whether wife should really start at 62, 65 or anywhere in between doesn’t matter that much.
Case 3
In case 3, the gaps in age and earnings between husband and wife are larger. The estimated benefit for the lower-earning spouse is still more than 50% of that for the higher-earning spouse.
Assumptions: Husband was born in April 1953, with an estimated benefit of $2,435 a month at his Full Retirement Age. Wife was born in April 1959, with an estimated benefit of $2,044 a month at her Full Retirement Age.
Open Social Security: Wife starts at age 62 and 1 month (husband is 68 and 1 month at that time); husband files a restricted application to claim spousal benefits at the same time. Husband switches to his own benefits at age 70.
Financial Engines: The same.
The two calculators agree. In this case...