Social Security Claiming Strategy Calculators Compared

Financial Engines was founded by Nobel laureate William Sharpe. It offers investment advice primarily through workplace retirement plans. Recently Financial Engines launched a free Social Security planner.

I test-drove it with some hypothetical cases. I also ran the same cases through the free calculators by AARP, T. Rowe Price, and SSAnalyze via Bedrock Capital.

Because Social Security benefits for singles are relatively straight forward. I chose only married couples for my test cases.

Case 1

In case 1, both husband and wife have similar age and earnings history.

Assumptions: Husband was born in 1954, wife in 1957. Estimated benefit is $2,000/month for both at Full Retirement Age.

Financial Engines: Wife claims early for a reduced benefit at 63 when husband is at full retirement age; husband claims spousal benefits only for 4 years. Husband switches to his own benefits at age 70.

AARP: Husband files and suspends (at 69) when wife is at full retirement age; wife claims spousal benefits only for 4 years. Husband resumes benefits at age 70. Wife switches to her own benefits at age 70.

T. Rowe Price: Same as AARP.

SSAnalyze: Same as Financial Engines.

We have two different strategies here. Either way one of them will get spousal benefits for 4 years and husband will wait until 70. The difference is whether wife will claim early at 63 or wait until 70.

I lean toward waiting, as recommended by the AARP and T. Rowe Price calculators. The other strategy is better if husband doesn’t live long. After husband dies, wife switches to survivor benefits. Her claiming early isn’t penalized for many years.

Case 2

In case 2, the gaps in age and earnings between husband and wife are larger. The estimated benefit for the lower-earning spouse is still more than 50% of that for the higher-earning spouse.

Assumptions: Husband was born in 1953, with an estimated benefit of $2,435/month at his Full Retirement Age. Wife was born in 1959, with an estimated benefit of $2,044/month at her Full Retirement Age.

Financial Engines: Wife claims early at 62 when first eligible (husband is 68 at that time); husband claims spousal benefits only for 2 years. Husband switches to his own benefits at age 70.

AARP: Husband waits until age 70 (wife is 64). Wife claims spousal benefits only starting at her full retirement age. Wife switches to her own benefits at age 70.

T. Rowe Price: Same as AARP.

SSAnalyze: Same as Financial Engines.

Again, the difference lies in whether the lower-earning spouse claims early or waits. I lean toward the strategy by AARP’s and T. Rowe Price’s calculators again. The other strategy is better if the higher-earning spouse doesn’t live long.

Case 3

In case 3 the lower-earning spouse is older. Her estimated benefit is less than one half of the her husband’s.

Assumptions: Husband was born in 1955, with an estimated benefit of $2,367/month at his Full Retirement Age. Wife was born in 1952, with an estimated benefit of $1,000/month at her Full Retirement Age.

Financial Engines: Wife claims early at 65 (husband is 62 at that time). Husband claims only spousal benefits when he reaches his full retirement age. Husband switches to his own benefits at age 70; wife also files for spousal benefits at that time.

AARP: Wife files and suspends at 69 when husband is at full retirement age; husband claims only spousal benefits. Wife resumes benefits at age 70. Husband switches to his own benefits at age 70.

T. Rowe Price: Husband files and suspends at full retirement age (wife is 69 at that time); wife claims spousal benefits only. Husband resumes benefits at age 70.

SSAnalyze: Wife claims at 66 (husband is 63). Husband claims only spousal benefits when he reaches his full retirement age. Husband switches to his own benefits at age 70; wife also files for spousal benefits at that time.

Here four calculators recommended four difference strategies. I think the one from AARP’s calculator is the best. Again the strategies from Financial Engines and SSAnalyze work better if the higher-earning spouse dies young.

Which Do You Listen To?

Even for these seemingly straight forward cases, different calculators produced different recommendations. I didn’t try the two paid calculators Social Security Solutions and Maximize My Social Security. Maybe they will give yet something different.

When it comes to my turn to claim Social Security benefits, I would run my numbers through all of them, both free and paid. The time and a small amount of money spent on getting the decision right would be worth it.

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Comments

  1. Dave Stamp says

    The SSAnalyze calculator is the only one that includes a discount rate % for the risk of accepting SS on a monthly basis, instead of a lump sum. Certainly something to be considered. I like it because at a 5% discount it tells me to take SS when I’m ~ 63.5 vs. slugging it out until 70. Something I was thinking made more sense for my particular situation anyway.

  2. Sam R says

    Harry, what a timely post. I was looking for a social security calculator to figure out at what age hubby and I best withdraw from social security. (Result: me at age 63.5. Hubby at age 70)

    But … the Vanguard Financial Plan that we use, calculate based on withdrawing SS at the age of 62. Ha!
    The CFP said it was because they want us not to touch our investments at age 62, and instead let them grow.
    Hm… What do you think?

  3. Sharon says

    Thank you for the information regarding SS. I am far past my second bend point according to the spreadsheet you set up. I read the previous comments and ran my information through three of the SS calculators which were mentioned. I am divorced after 25 years of marriage and have remained single. The only calculator which took this into account was the one from AARP. Neither the T. Rowe Price nor the SSAnalyze calculators factored in that information although both of them had places in which to enter marital status, and neither of them mentioned the fact that I am eligible to draw on my ex-husband’s SS until I want to draw on my own.

    I just thought I would mention this for anyone else who might be in a similar situation.

    Once again, thanks for all the information you provide.

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