W

hen should you start taking your Social

Security benets? You might feel tempted
to begin as soon as you qualify at age 62,
but this may not be the best choice for you. If you are
single, your decision on when to take benets may
depend, in part, on the amount of retirement savings
at your disposal. Ideally, you would maximize your
Social Security benet by working until age 70 before
applying for any payments. If you are married,
however, you have more options to consider, and the
decisions you and your spouse make will afect your
combined income in retirement.
As with single individuals, you and your
spouse will benefit most from Social Security if
you continue working until age 70. Doing so will
significantly increase the Social Security benefits
available to you throughout retirement. But
thats not always the most appropriate strategy.
Many couples prefer retiring before age 70,
says Christine Fahlund, CFP, a senior financial
planner with T.RowePrice. In that case, we
suggest they consider the option of choosing a
compromise known as a wait and take strategy.
YOUR SOCIAL SECURITY OPTIONS
When and how you start collecting Social Security will determine whether
you take full advantage of the total benets available to you.
INCOME STRATEGY
YOUR
GOAL 1
TAKE THEM
EARLY
GOAL 2
MAXIMIZE
THEM
GOAL 3
MAXIMIZE THEM
AND TAKE THEM EARLY
Using the T.RowePrice Social Security Benets Evaluator tool on our website, the following hypothetical
scenarios explore the pros and cons of three diferent goals for Social Security benets. Together, these
scenarios show how diferent decisions produce diferent lifetime incomes from Social Security alone.
8 T. ROWE PRI CE I NVESTOR MARCH 2014
MANAGING IT
A Look At The Numbers
Consider the scenarios for Paul and Jane, both age 60.
Paul currently earns $90,000 per year and Jane earns
$50,000. For the purposes of the following examples,
we assume Paul passes away at age 83 while his wife
survives until age 95. Jane will receive the larger of the
couples two benet payments as a survivors benet.
The goals they set and the decisions they each make
about when to begin receiving benets will have a direct
impact on their combined cumulative lifetime income
from Social Security.
GOAL 1
TAKE SOCIAL SECURITY BENEFITS AS EARLY AS POSSIBLE

Despite your best planning, you may need to begin
taking your Social Security benets sooner than
expected. Many individuals may need the income
Social Security provides, says Fahlund. If so,
both you and your spouse could choose to receive
benets as early as age 62, when you become
eligible. But that decision would mean you would
both receive the smallest benet availableonly
slightly more than half of the maximum amount
for which you could be eligible.
The Benets Evaluator shows the outcome if
Paul and Jane rely on the early strategy. (See
table at right.) Their combined lifetime benets
approach $1 milliona clear indication that Social Security represents
an important part of Paul and Janes retirement income plan. As a result,
they should make the most of the benets they are eligible to receive.
$972,567
AT AGE 62
AT AGE 62
SURVIVOR BENEFIT
TODAYS DOLLARS
PAULS
BENEFIT
JANES
BENEFIT
$20,394
CUMULATIVE
LIFETIME
BENEFIT*
$14,265
$20,394
* Includes benets for both Paul and Jane from age 62 to age 83, plus Janes benets to
her death at age 95.
You can start collecting benets as
early as age 62 or as late as age 70.
Each year you wait to take benets
will increase the amount you receive
annually by approximately 7% to
8% plus ination adjustments. This
guaranteed annual return is based on
Social Security Administration formulas
rather than market conditions, so it is
more predictable than annual returns
on your investment portfolio.
Social Security benets have tax
advantages. Anywhere from 15%
to 100% of Social Security benets
is federal income tax-free and, in
addition, in many parts of the country,
Social Security benets are 100%
state tax-free.
When a married worker les for
Social Security retirement benets,
that individuals spouse may be eligible
for a benet based on the workers
earningscalled a spousal benet.
A surviving spouse receives the larger
of the two spouses benets and is not
eligible to continue receiving both at
the same time.
SOCIAL SECURITY FACTS
Consider these basic facts as you work through your own scenario.
MARCH 2014 T. ROWE PRI CE I NVESTOR 9
Some couples may continue working throughout their 60s and not need
their Social Security benets right away. Consider if Paul and Jane each
le for benets at age 70. In doing so, they ensure that they both receive
the highest possible annual benet from Social Security based on their
personal work histories. By forgoing Social Security income in their
initial years of eligibility, in
exchange for maximizing their
benets, the couple has the
potential to receive at least
$250,000 more in lifetime
benets. (Compare tables for
goals 1 and 2.) Maximizing
the higher-earning spouses
benet has an outsized
impact because it means the
survivor benet is as big as it
can be, says Fahlund. As a
result, the surviving spouse
can potentially plan on a
more nancially comfortable
retirement.
GOAL 2
MAXIMIZE YOUR
BENEFITS
Q.
If I have already started taking
benets and now regret my
decision, do I have any recourse?
A.
Yes. If you started receiving your
benets less than 12 months ago,
you can pay everything back to the Social
Security Administration and start over with
a new claiming strategy at a later date.
Alternatively, if you have been receiving
benets for more than 12 months and have
reached your full retirement age (FRA), you
can ask to suspend your benets up to
age 70, which could increase your payments
by as much as 32%.
Q.
I plan on working full time past
age 62. Why should I delay benets
until I reach full retirement age?
A.
If you le early but continue to work,
the Social Security Administration
will temporarily reduce your benets,
which will gradually be reimbursed to you,
starting at your full retirement age. The
already lower benet you receive when
you le before FRA will be further reduced
by $1 for every $2 you earn above the
annual wage limit$15,480 in 2014.
Once you reach your FRA, however, there
is no limit on how much you can earn
without any reduction in your benets. If
you are working past age 62, waiting to
claim benets helps avoid having your
work income temporarily count against the
benet amount youre eligible to receive.
ANSWERS TO COMMON SOCIAL SECURITY QUESTIONS
Christine Fahlund, CFP

, a senior nancial planner with T.RowePrice, explains how to undo

your Social Security ling decision and how to claim full benets while working.
Given Pauls and Janes particular ages and
Social Security benets, Paul can also le
and suspend his benets at age 66 (his full
retirement age), enabling Jane to receive spousal
benets if she les when she is age 66 and
restricts her application to spousal benets
only. Both Paul and Jane could then le for their
own maximum benets at age 70. This additional
spousal benet strategy enables the couple to
increase their cumulative lifetime benet by
more than $54,000 over four years (totaling
approximately $305,000 more than Goal 1) and
to actually begin receiving income from Social
Security before Paul and Jane each attain age 70.
*Includes benets for both Paul and Jane from age 62 to age 83, plus Janes benets to her death at age 95.
$1,223,703
AT AGE 66
AT AGE 66
SURVIVOR
BENEFIT
TODAYS DOLLARS
PAULS
BENEFIT
JANES
BENEFIT
$0
CUMULATIVE
LIFETIME
BENEFIT*
$0
$25,106
$35,893
ENHANCED STRATEGY
AT AGE 70 $35,893
AT AGE 70
$1,278,087
SUSPENDED BENEFIT
SPOUSAL BENEFIT
$0
$13,596
$25,106
$35,893
FULL BENEFIT
$35,893
BASELINE STRATEGY
OWN BENEFIT
Enhanced
Strategy
for Goal 2
10 T. ROWE PRI CE I NVESTOR MARCH 2014
MANAGING IT
GOAL 3
WAIT AND TAKE STRATEGY OF EARLY
INCOME AND LARGER SURVIVOR BENEFIT
If Paul and Jane want to retire
when they are 62 but they still want
to maximize the benet for the
surviving spouse (in this illustration,
Jane), they can pursue a wait and
take strategy. They can wait
to take the higher earning
spouses (i.e., Pauls) benets
when he is age 70, while
beginning to take withdrawals
from their portfolio and Janes
benets at age 62.
Janes claiming at age 62
reduces the amounts they
would need to withdraw
from their portfolio before
Paul attains age 70, and Pauls
delay helps boost the couples
lifetime cumulative benets
signicantly, says Fahlund.
Paul can receive some early income as well,
given that Jane claims her benets at age 62.
Beginning at his full retirement age of 66, Paul
can le restricting his application to spousal
benets only, based on Janes work record.
Then Paul could le for his own benets at
age 70, thereby receiving his maximum
benetand maximizing the couples survivor
benets. This strategy could allow the couple to
retire at age 62 while still achieving a lifetime
benet that is very close to the enhanced goal 2
cumulative benet.
$1,196,890
AT AGE 66
AT AGE 62
SURVIVOR
BENEFIT
TODAYS DOLLARS
PAULS
BENEFIT
JANES
BENEFIT
$0
CUMULATIVE
LIFETIME
BENEFIT*
$14,265
$35,893
AT AGE 70 $35,893
$1,234,930
SPOUSAL BENEFIT
$9,510
$14,265
$35,893
OWN BENEFIT
$35,893
BASELINE STRATEGY ENHANCED STRATEGY
OWN BENEFIT
CONTROLLING YOUR INCOME
The choices you make about how and when to
claim your Social Security benefits can have a
sizable impact on the total amount of benefits you
collect over your lifetime. Waiting just a few years
to apply for benefits can lead to significantly
more incomemore so for married couples
who approach this decision together and who
have multiple strategy options. Ultimately, the
trade-offs you make and your choices about when
to start taking benefits have the potential to
affect your quality of life for years to come, says
Fahlund. Its important that you understand
and make your claiming decisions together,
as a couple, while keeping in mind your other
retirement income sources and goals. .
THE T.ROWEPRICE SOCIAL SECURITY
BENEFITS EVALUATOR TOOL
This online resource was developed as a way to evaluate
how different Social Security income strategies might affect
your retirement income. Simply enter details about your
current situationyour age, marital status, and current
incomeand select a goal for your Social Security benets
in retirement. You can see the impact of choosing different
goals and their resulting strategies immediately.
To access the T.RowePrice Social
Security Benets Evaluator, visit
troweprice.com/socialsecurity.
*Includes benets for both Paul and Jane from age 62 to age 83, plus Janes benets to her death at age 95.
Enhanced
Strategy
for Goal 3
MARCH 2014 T. ROWE PRI CE I NVESTOR 11