How Single Filers Can Get the Most from Social Security

Last Updated Jun 6, 2011 10:46 AM EDT

I've received a number of e-mails from readers who are single and want to know what the best Social Security filing strategy is for them. I asked my Buckingham Asset Management colleague Tiya Lim for her input, as she wrote the Social Security section of our book The Only Guide You'll Ever Need for the Right Financial Plan. Here's her response.

As a single filer, the best strategy comes down to expectations about how long you think you're going to live.

Social Security benefits are actuarially neutral, which means that you'll get roughly the same overall benefits (on a present value basis) if you live to average life expectancy, no matter what age you begin taking benefits. However, keep in mind that your benefits get larger the longer you wait to begin taking them. If you live past life expectancy, you earn more by delaying benefits.

Furthermore, it's even more advantageous for women to delay filing since benefits are also gender neutral. That means that a man and a woman with identical earnings histories will receive the same benefits, even though an average woman's life expectancy is longer than the average man's.

For example, a 62-year-old female has an average life expectancy of 84. If her full retirement benefit is $1,000:
  • She will receive $750 per month if she files at age 62.
  • She will receive $1,320 per month if she files at age 70.
A man of the same age gets the same benefits (assuming his full retirement benefit is also $1,000 per month). However, his average life expectancy is three years shorter. The tables below shows how a three-year difference in life expectancies between women and men changes the overall strategy for filing.

Female Files at 62

Female Files at 70

Benefit to Delaying

Avg. Life Expectancy Minus Five Years (Age 79)

$113,352

$105,618

-6.8%

Avg. Life Expectancy (Age 84)

$134,305

$150,421

12.0%

Avg. Life Expectancy Plus Five Years (Age 89)

$150,911

$186,906

23.9%

Male Files at 62

Male Files at 70

Benefit to Delaying

Avg. Life Expectancy Minus Five Years (Age 76)

$98,423

$74,239

-24.6%

Avg. Life Expectancy (Age 81)

$122,295

$124,612

1.9%

Avg. Life Expectancy Plus Five Years (Age 86)

$141,434

$165,950

17.3%

However in both cases, if you expect to live longer than the average individual and you can afford to delay, you could be better off by taking benefits later regardless of gender. In effect, delaying benefits is like buying longevity insurance. If you live longer than expected, you decrease the risk of running out of money. If you don't live longer than expected, you didn't need the money anyway.

For further reading on Social Security, see the following posts:
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    Larry Swedroe is a principal and director of research for the BAM Alliance. He has authored or co-authored 12 books, including his most recent, Think, Act, and Invest Like Warren Buffett. His opinions and comments expressed on this site are his own and may not accurately reflect those of the firm.

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