Ask Liz Weston

Get smart with your money

delaying Social Security

Q&A: Retirement planning for late starters

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Dear Liz: I am in my late 50s, married and woefully unprepared financially for my later years. I was a stay-at-home mom for many years. I now work almost full time but my employer has no 401(k) or profit sharing or really any benefits at all. I just started putting $8,000 (the catch-up amount) into my Roth IRA. What else can I do now to make up for lost time?

Answer: You can’t really make up for the decades of compounded returns you missed by not investing earlier. But you can make some smart decisions now for a more comfortable retirement.

Your most important decision likely will be how you and your spouse claim Social Security. Your spouse almost certainly should wait to claim until age 70 to maximize their lifetime benefit and to lock in the highest possible survivor benefit. If you outlive your spouse, this benefit could comprise the bulk of your income. Consider reading “Get What’s Yours,” a book about Social Security claiming strategies by Laurence J. Kotlikoff and Philip Moeller. Just make sure to get the updated version that was published in 2016, since earlier versions refer to strategies that Congress eliminated.

Delaying retirement is another powerful way to compensate for a late start, since you’ll have more years to work and save. Consider finding an employer who will help you secure your future by providing a 401(k) with a generous match. You’ll be able to contribute substantially more to a workplace retirement plan than you would to a Roth.

You and your spouse should consider hiring a fee-only financial planner to review your situation and offer customized advice.

Q&A: You can’t spend it when you’re gone, but delaying Social Security payments makes sense

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Dear Liz: I’m a single person with no children. I worked for one private employer for 36 years, retired from there at 54 and am now 57. My home is paid off. I receive a pension of $2,400. I’ve been working a nearly full-time job averaging $3,800 a month with 8% going into a 401(k) and 4% being matched. I have observed many fellow workers wait till 65 to collect Social Security and then die a few years later. I also volunteer at my local VFW and listen to people complain about the lack of money they have, especially the women, who unfortunately relied on their dead husbands. So would it be bad for me to start collecting my Social Security at 63?

I am a very healthy person and longevity is in the family.

Answer: Some people do die shortly after retiring. Most, though, live well past the “break-even” age, when the smaller checks they give up by delaying Social Security are more than made up for by the larger checks they receive by waiting.

And the ones who die early … well, they’re dead. They no longer care about Social Security checks. The ones who care intensely about how much they’re getting are those who survive and run through their savings. Perhaps some of the women at the VFW had husbands who started their retirement benefits early, thus stunting the survivors’ checks their wives are getting. A few years’ delay could have made a huge difference to these women, who may have to live for years or even decades on a too-small benefit.

That’s why it’s so important for the higher earner in a couple to delay starting Social Security as long as possible, preferably to age 70, when their benefit maxes out. That’s also good advice for single folks who haven’t been previously married and don’t have another person’s benefit to supplement their own.

Plus, starting Social Security before your full retirement age of 67 means you’re subject to the earnings test. That test reduces your check by $1 for every $2 you make over a certain amount, which in 2024 is $22,320.

Your good health and family longevity don’t guarantee a long life, but they certainly make it more likely. Maximizing your Social Security benefit is a powerful way to ensure you don’t run short of money in your old age.

Q&A: When should a second earner start taking social security?

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Dear Liz: I am 64 and still working and earning decent pay. My wife is 61 and retired. I have been a high earner for most of my life while she was working and raising our family. I don’t plan to retire anytime soon. Is it a good idea for her to start taking Social Security at 62?

Answer: The vast majority of people are better off delaying their Social Security applications for as long as possible so they can maximize their lifetime benefits. It’s especially important for you to delay, since as the higher earner, your benefit will determine what the survivor gets.

Your wife, however, may be one of the few who is better off starting early. That may be the case if you continue to delay your application, and her eventual spousal benefit is more than what she would receive on her own record.

If both of those things are true, she could start her own reduced retirement benefit at 62, then switch to a spousal benefit of up to half of your check after you apply for your benefits — preferably at age 70, when they max out.

Your wife won’t be able to get a spousal benefit until you apply for your own. On the other hand, she won’t be allowed to switch benefits if you’re already receiving yours when she applies.

Clearly, there are a lot of rules involved, and the best course for you two will depend on the specifics of your situation. You’d be smart to use a Social Security claiming site, such as Maximize My Social Security or Social Security Solutions, to help you determine your best approach.