Legal   |   ADV   |   Privacy   |   CRS

Choosing the Right Social Security Distribution Strategy


Every day, approximately 8,000 Americans turn 65 years old, which is the traditional retirement age. One of the many decisions facing 65-year-olds is when should they start receiving their Social Security retirement benefits.

It’s not as simple as opting to receive Social Security starting on your 65th birthday. In face, there’s a lot of flexibility built into how and when you can start receiving monthly Social Security benefits — and many different factors go into making the right decision.

The Eight-Year Window

There is an eight-year window during which you can begin claiming Social Security benefits. You can start receiving benefits as early as age 62 or as late as age 70. However, if you start receiving benefits before you reach your full retirement age, your monthly Social Security check will be smaller than if you want until full retirement or beyond.

Your full retirement age depends on the year when you were born: For those born in 1960 or later, full retirement is 67. For those born between 1938 and 1959, full retirement is 66. And for those born before 1938, full retirement is 65.

If you choose to start receiving Social Security when you turn 62 (or any time before you reach your full retirement age), your monthly benefit check will be approximately 8 percent smaller than if you wait until full retirement. On the flip side, if you wait until after full retirement, your monthly benefit check will be approximately 8 percent higher. This extra benefit accrues up to age 70, so there’s no reason to delay receiving Social Security after you reach this age.

Keep in mind that these benefit reductions and increases are permanent. In other words, you will receive an 8 percent smaller or larger payment for the rest of your life once you start receiving benefits. This makes it critical to plan carefully and make sure you choose the right strategy for you and your spouse. Some questions to ask as you plan include:

  • How much cash do you need? If you intend to keep working past 62, you may not need to start receiving Social Security benefits this early.
  • How healthy are you? Also, does your family have a history of longevity? If so, it might be wise to wait as long as possible to start receiving benefits in order to increase your monthly check.
  • What are your other sources of retirement income? If you have a large retirement account and/or pension plan, it also might make sense to hold off on receiving Social Security until you reach full retirement or later.

Popular Social Security Strategies Eliminated

There is a recent development you should also be aware of that could have a big impact on your Social Security strategies. The Bipartisan Budget Act of 2015 has eliminated two popular strategies for claiming Social Security that many married couples have used to increase their benefits.

The “file-and-suspend” strategy has been used primarily by married couples when one spouse has earned substantially more money than the other. The higher earning spouse would file to receive Social Security when he or she reaches full retirement age but suspend actually receiving the benefits until age 70. Not only would this spouse receive higher benefits when turning 70, but the other spouse would be able to receive spousal benefits based on the higher-earning spouse’s earnings record if they exceed his or her benefits.

The budget act has made changes that effectively eliminate this strategy. However, if you are currently utilizing the strategy, you are grandfathered in. You can also still use the strategy if you will turn 66 before May 1, 2016, and file to receive Social Security by then.

In addition, the “restricted application” strategy, which has also been used by married couples to increase their Social Security benefits, has been affected by the legislation. Using this strategy, a spouse who has reached full retirement age would file a restricted application for spousal benefits but delay applying for his or her own benefits. The higher earning spouse could then claim 50 percent spousal benefits while allowing his or her own benefits to continue growing. The budget act is phasing out this strategy

If you have more questions about Social Security distribution strategies in general, or about these two strategies specifically, please call us to arrange a meeting so we can discuss your particular situation.


The commentary is limited to the dissemination of general information pertaining to Frontier Wealth Management, LLC’s (“Frontier”) investment advisory services. This information should not be used or construed as an offer to sell, a solicitation of an offer to buy or a recommendation for any security, market sector or investment strategy. There is no guarantee that the information supplied is accurate or complete. Frontier is not responsible for any errors or omissions, and provides no warranties with regards to the results obtained from the use of the information. Nothing in this document is intended to provide any legal, accounting or tax advice and Frontier does not provide such advice. This information is subject to change without notice and should not be construed as a recommendation or investment advice. You should consult an attorney, accountant or tax professional regarding your specific legal or tax situation.