Suze Orman has carved out a significant niche for herself in the world of financial advice, sharing her expertise through books, TV shows, podcasts, and numerous interviews. Her insights on Social Security are particularly noteworthy, and I’ve found myself nodding along with much of her perspective.
Let’s dive into some of Orman’s key recommendations on Social Security, along with some additional points you might want to consider.
Understanding Social Security Basics
When it comes to Social Security, every one of us has a "full retirement age." This is when we’re eligible to start receiving the complete benefits we’ve accrued over our working lifetimes. If you haven’t reached this age yet, it will likely be 66 and a few months or 67, depending on when you were born. Specifically, for those born in 1960 or later, the full retirement age is 67.
Choosing when to begin collecting these benefits is a crucial decision. Opting to receive benefits early means smaller monthly checks, although you’ll receive more of them over time. Conversely, delaying past your full retirement age rewards you with delayed retirement credits, enhancing your checks by about 8% per year—or 0.66% each month.
You can accumulate these credits until you hit 70, after which there’s no benefit in waiting any longer to claim your benefits. The table below shows the percentage of your full benefits you’re entitled to receive depending on the age when you start your benefits:
- Start Collecting At:
- Full Retirement Age of 66:
- 62: 75%
- 63: 80%
- 64: 86.7%
- 65: 93.3%
- 66: 100%
- 67: 108%
- 68: 116%
- 69: 124%
- 70: 132%
- Full Retirement Age of 67:
- 62: 70%
- 63: 75%
- 64: 80%
- 65: 86.7%
- 66: 93.3%
- 67: 100%
- 68: 108%
- 69: 116%
- 70: 124%
Suze Orman’s Perspective
Orman strongly advocates for delaying the claim of your Social Security benefits. She’s quoted saying, "I am never going to stop pushing each of you to remain open to the value of waiting to claim your Social Security benefit if you are not dealing with a life-shortening illness."
In a recent Facebook post, she emphasized the importance of wise planning for retirees, particularly women, who should consider what might be best for their older years. If a household plans to rely heavily on Social Security, deciding when to start benefits is crucial. In the unfortunate event of a spouse passing, the survivor can claim just one benefit—the higher of either the survivor’s own or the deceased spouse’s benefits. Orman suggests the highest earner should wait until age 70, securing the maximum payout which could be over 75% higher than starting at 62. This strategy can protect the eventual surviving spouse’s income.
Considering Social Security Options
Is waiting until 70 the right path for everyone? Probably not. Various analyses arrive at different conclusions, and rarely suggest one solution fits all. Here are six factors to think over when deciding if delaying is the right move for you:
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Your Health: Healthy retirees might benefit most from delaying, as they stand a better chance of living longer. Conversely, if your health isn’t the best, claiming benefits earlier might be smarter.
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Working Status: If you’re working and start collecting benefits before reaching full retirement age, your benefits could be docked for excessive earnings. Fortunately, the withheld benefits aren’t lost; they’re recalculated into your future benefits.
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Inflation Concerns: Delaying benefits can be advantageous during inflationary times, as Social Security often adjusts for living costs. The larger your benefit, the more you gain from these adjustments.
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Investments: Taking benefits early could mean needing less from your savings and allowing it to grow. However, delaying might require faster depletion of your nest egg.
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Lifespan: If you expect a long life, maximizing benefits by delaying ensures a more substantial income in your later years when your savings may be low.
- Social Security’s Stability: The program faces financial challenges ahead. Without adjustments from policymakers, future benefits might be reduced. Future uncertainty might lead some to claim earlier.
Reflect on Orman’s advice, and weigh whether postponing your Social Security benefits might be your best bet.
