Working longer typically boosts monthly Social Security benefits, but there are exceptions, particularly regarding spousal benefits. The Social Security Administration calculates benefits based on the highest 35 years of indexed earnings, which can lead lower earners—often those who worked part-time or stayed home—to find that claiming spousal benefits is more advantageous than extending their own work life.
For instance, if a lower-earning spouse is married to someone with a primary insurance amount of $3,000, they could receive $1,500 in spousal benefits at full retirement age. If their own benefit is only projected at $1,100, claiming spousal benefits becomes the more financially sound option. In contrast, for most workers, delaying benefits until age 70 can yield a significant increase—up to 24%—in monthly payments.
The key takeaway for market professionals is the importance of understanding Social Security strategies in retirement planning. This knowledge can influence financial decisions and portfolio strategies, particularly for clients nearing retirement who may need to optimize their income sources.
Source: fool.com