Dear Dr. Don,
I plan to work until I'm 70 years old. I'm 64 now and healthy (so far), so I would like to receive the higher Social Security benefits of waiting until I'm 70. I should also tell you that I'm divorced and that my ex-spouse and I were married for more than 22 years. He's on disability and is either already 66 years old or will be this January.

I spoke to a financial adviser awhile back, and he said I should take Social Security benefits when I turn 66, and he will invest them at a guaranteed 3% interest rate. I can still continue to work until I'm 70. Am I better off doing that, or not taking any Social Security benefits until I turn 70?

Thanks,
-- Karen Choices

Dear Karen,
If a worker can afford to wait until age 70 to file for Social Security benefits, I lean toward recommending that course of action. By waiting until age 70, the worker earns delayed retirement credits, increasing her benefit by 8% annually.

If you're 64 now, your full retirement age is 66. If you wait until age 70 to file for benefits, your monthly Social Security retirement benefit will be 132% of the benefit you would have received at your full retirement age.

My recommendation for you is that, at your full retirement age of 66, you claim a spousal benefit based on your ex-husband's work record, providing that you haven't remarried. You'll receive a benefit equal to 50% of what Social Security calls his "primary insurance amount," the benefit he would receive at his normal retirement age. You'll earn delayed retirement credits on your work record while receiving the spousal benefit.

This approach trumps the one offered up by the financial adviser because it provides you with spousal Social Security benefits from age 66 to 70. Then, at age 70, you will receive benefits based on your own work record that will be 132% of what you would have qualified for at age 66. If you want to invest the spousal benefits with the adviser, that's up to you.

I argue for taking advantage of delayed retirement credits when you don't need the Social Security benefits for income prior to age 70. The potentially higher benefit helps you manage longevity risk. The annual cost-of-living adjustments are made on a benefit base that is 32% higher than the primary income amount that you would receive at your full retirement age.

The Social Security Administration has done a study comparing the total dollar benefits you receive when you apply for benefits at different ages. The study found that: "If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between."

Don't forget to file for Medicare benefits at age 65, if appropriate, depending on whether the health insurance coverage you have from work continues past age 65.

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