Married women should take Social Security benefits early.

Married men and single women should take Social Security benefits late.

That's the conclusion of a recent study by economists Alicia Munnell and Mauricio Soto at the Center for Retirement Research at Boston College.

Needless to say, this isn't what most people do. More than 50 percent of all men and women start taking benefits at 62. By age 66, well over 90 percent of all men and women are taking benefits. Since only 3.3 percent of all men start taking benefits at 66 or later, we have to conclude that men are doing the wrong thing and women (as always) a Unfortunately, the mistake most men make won't be theirs alone. Since men tend to marry younger women and women tend to outlive men, married women will pay much of the price for husbands who take benefits too early.


Then let's start with the basics of life, death, and Social Security benefits. We'll use figures from Dr. Munnell's research.

What you receive in benefits depends on your earnings record and when you start taking benefits. Take them early and your benefits will be lower than if you take them late.

For those turning 62 between 2005 and 2016, benefits at 62 will be 75 percent of benefits at 66. Benefits at 70 will be 132 percent of benefits at 66. Altogether, your benefits will rise a whopping 76 percent in the 8 years from 62 to 70. That's a compound growth rate of 7.32 percent. This rate of increase is the major reason I've written about the value of deferring benefits.

By Dr. Munnell's calculations, anyone who expects to live to age 80 or longer will enjoy a greater discounted present value in benefits by starting at age 66 than at age 62. Her calculations assume a real (inflation adjusted) discount rate of 3 percent. This isn't a pushover rate. Many investors--- particularly retired investors--- would be happy to receive a secure 3 percent real return on their savings.

Dr. Munnell argues that since women, on average, will live longer than the 80-to-81 year break-even age and that one-third of all women will live into their 90s, taking benefits later is a good idea.

In fact, that is what single women do. While only 48.9 percent of single women take benefits at 62, 67.1 percent of married women take them at 62. Single women would benefit from further delay but they've got the basic idea.

Ironically, married women who take benefits early have the right idea, too.

How can it be right for single women to take benefits late and married women to take benefits early?

Simple. Married women have husbands. Single women don't.

For married couples, how long Social Security benefits are received depends on their joint life expectancy, not their individual life expectancy. While an individual, at 65, may expect to live 18.2 more years, the joint expectancy of a 65-year-old couple is 26.2 years--- one of them is likely to survive that long. That's well beyond the break-even point calculated by Dr. Munnell.

Now follow the probabilities a little further. Since married women will probably survive their husbands and then receive the greater of their benefit or their late husbands' benefit, it makes sense for them to take benefits early. Why? Because reduced early benefits are only temporary--- their benefits will increase later, when their husband dies.

Yes, I'm expecting a lot of readers are rolling their eyes at this lugubrious bit of analysis.   But this is how it is.

And Dr. Munnell has gone a bit further. She calculated the optimum age for taking benefits for both husband and wife to maximize their joint benefits, adjusting for the age difference between spouses and relative earnings.

Her finding? For most couples, the wife should take benefits at 62 while the husband should take them at 69. Couples that are close in age and earnings should favor taking benefits between age 66 and 68.

Bottom line: Many of us should take benefits later than we do.

Optimal Ages to Claim Social Security Benefits

This table shows the retirement ages at which a couple is likely to achieve maximum lifetime Social Security benefits.
Age Difference Wifes' earnings 0-30 percent of husband's Wife's earnings 30-40 percent husband's Wife's earnings 40-100 percent husband's earnings
0 years 66 husband, 66 wife 67,66 69,62
3 68,65 69,62 69,62
6 68,62 69,62 69,62
Percent of households 32.1 11.0 47.2
Source: Alicia H. Munnell and Mauricio Soto, Center for Retirement Research

Tuesday: A Closer Look at the Facts of Life (and Death)      On the web:

Center for Retirement Research "Why Do Women Claim Social Security Benefits So Early?"

  "Take your time before taking Social Security", Tuesday, November 22, 2005

"Tax bill is key to puzzle," Tuesday, November 29, 2005

"Putting benefits off could really pay off," Tuesday, December 13, 2005