When to Claim Social Security Retirement Benefits（当要求社保退休福利）.pdfVIP

When to Claim Social Security Retirement Benefits David Blanchett, CFA, CFP® Head of Retirement Research Morningstar Investment Management January 10, 2013 Morningstar Investment Management Abstract Social Security (SS) is the largest source of retirement income for most Americans. This paper provides the reader with an overview of the SS retirement system and offers insight into key factors that should be considered when determining when to begin receiving SS retirement benefits. Five separate tests are performed, each of which considers a component that is important to the optimal claiming decision, such as life expectancy, taxes, the cost of purchasing equivalent insurance, and the benefits of the sur- viving spouse. Three claiming scenarios are considered: receiving benefits early (e.g., at age 62 versus 66); delaying benefits past full retirement age (e.g., age 66 versus 70); and the maximum realistic delay period (e.g., at age 62 versus 70). The results of this analysis suggest most retirees would be best served delaying SS benefits until at least full retirement age (FRA) or later, and that delayed SS benefits are especially valuable for females, married couples, retirees who expect to invest in relatively conservative portfolios during retirement, and retirees who have longer life expectancies. The effective “return” achieved by a retiree from making the optimal SS decision can significantly exceed the return he or she could potentially earn by investing the money received from starting benefits earlier and “investing the difference,” especially in today’s low interest rate environment. We find the optimal Social Security claiming decision can generate 9.15% more income for a hypothetical retired married couple, which creates an annual equiva- lent “financial planning alpha” (or gamma) of +0.74% per year. The author thanks Alexa Auerbach, Jim Daley, and Francisco Torralba for helpful comments. Published in the Journal of P