March 18, 2020

Edited 07/13/20

Navigating Social Security Options During Uncertain Market Conditions

The current downturn in the markets has many Americans evaluating how to shore up their income. With Social Security being a primary source of guaranteed income for most, it is no surprise that many are reconsidering their Social Security strategy. Before you make your decision to tap into your benefit earlier than you had hoped, here are some points to consider.

Getting Help 

The Social Security Administration announced earlier in the week that they will be temporarily suspending in-person visits to Social Security Administration field offices. However, they are still available through the phone and most importantly online. 

Applying for benefits

The online process to sign up for Social Security can be accessed by using this link. The process is simple and takes 15 minutes to complete. There is some information that you will need to collect prior to beginning the online application process. The list of items that you may need can be found here.

Managing your account

If you have not done so already, you should take the time to register online at ssa.gov. This will allow you to access your benefits information, manage your account and review things like your earnings record.

Filing Strategy

When considering the right time to take your benefits, it is always a good idea to understand the decision in the context of your overall retirement plan. You can typically elect Social Security between ages 62-70. When considering your election date, take into account your overall retirement income along with your (and your spouse’s) life expectancy.

Continue to delay if possible

If possible, delaying benefits is still the recommended path. Taking benefits early (before full retirement age of 66 or 67) can leave you with a reduced benefit for your lifetime. Even though you are allowed to take benefits as early as age 62, this does not mean that you should. 

It is only at the full retirement age of 66 or 67 that you will receive 100% of the benefit that you have earned. Further, for each year that you delay your benefit beyond your full retirement age, your benefit grows by 8% until you reach age 70. 

Consider your spouse

Electing an early benefit could also affect the benefit your spouse receives. If you are the higher income earner in the relationship, your spouse may be relying on a spousal benefit based on your work record. Therefore, not only would your benefits reduce, but your spouse would also receive a reduced benefit for the remainder of his or her life.

As an alternative, the lower-income earning spouse may choose to access their benefit based on their own work record. This could be a way to bring in some income without affecting the benefit of the higher-income earner.

Part-time Work

Many Americans will find themselves looking for additional income to help them weather the storm. The good news is that there are more remote and part-time jobs available than ever before, but make sure to know how part-time income can impact your Social Security election.

New part-time work options

As a result of COVID-19, there are a number of companies that are looking for remote workers. Are you a former teacher, doctor, nurse? Consider becoming an online teacher or tutor through organizations like Outschool or tutors.com where you can teach students remotely. Education organizations are looking for thousands of remote teaching positions to fill due to school closures. Other part-time jobs can include providing professional online services like bookkeeping, answering medical hotline questions, and consulting. But make sure to understand Social Security’s earnings test to see how this will affect your income if you are going to collect your benefit prior to full retirement age. 

Delaying retirement from full-time work

You may want to consider delaying retirement and continue working for a couple of additional years. This will help eliminate the need to take Social Security benefits and reduce withdrawals from your retirement accounts. This is an option worth considering if you can continue to work a little longer. If you’re unable to continue, perhaps you could look into part-time consulting or working a reduced schedule at your current company.

What if I Need the Income?

If you were fortunate enough to plan ahead and set aside some cash for emergencies, now would be a good time to use it. Not only could this help you postpone taking your Social Security benefit, but it could also potentially reduce withdrawals from your retirement accounts while markets are depressed. 

As a last resort, you may consider turning on your income from Social Security. At a minimum, it is advised to wait until your full retirement age. Taking your benefit early is only advisable if you are unable to utilize any of the alternative income strategies listed above.