When To Claim Social Security — A Crucial Planning Decision

SAN DIEGO -- Brian Doherty was national sales manager at New York Life and knew little about the important little details of how Social Security works.

He was even heading the Retirement Income Services division. Still, it didn't seem all that important to know how Social Security really worked, he said.

"I was kind of blown away when I started to read some things about it," said Doherty, who was with New York Life from 1998-2010. "There’s a lot of research out there, college professors with PhDs talking about how to overcome risk -- longevity risk, withdrawal rate risk, inflation, health care costs and market risks.

"It kept popping up so I read about it and I was blown away. I had no idea that Social Security worked like this."

Today, Doherty advises and consults with financial professionals and groups on those very details that can add tens of thousands of dollars to a client's retirement bucket. He is speaking today at the National Association of Health Underwriters' 2019 convention.

The Doherty Method

In 2015, Doherty's book, Getting Paid To Wait – Bigger Social Security Benefits the Simple and Easy Way, was published and went on the win the International Book Award as the best personal/finance book that year.

It formed the basis for the "Doherty Method," a Social Security claiming strategy. He calls the decision on when to claim social security "one of the most important financial decisions a person will make in their lifetime."

And many advisors and agents are short on all the Social Security details, Doherty said. Even employees of the Social Security Administration regularly give out inaccurate information, he said.

“All this stuff, if you don’t know it, or your clients don’t know it when they go in there, it could end up costing them a lot of money," he added.

For example, when a spouse dies, the surviving person can collect their own benefit, or switch to a survivor benefit. If a person misses out on collecting a higher survivor benefit, they are entitled to up to six months of retroactive benefits.

An internal audit released in February 2018 found that 82% of current beneficiaries who are dually entitled to survivor benefits and their own retirement benefits would have received a higher monthly benefit amount if SSA had informed them of the option to delay their retirement application until age 70.

The audit report estimated that SSA underpaid $131.8 million to 9,224 beneficiaries who were age 70 and older.

'They Need Every Dollar'

Because women live longer than men, it is usually a widower who is getting shortchanged, Doherty said.

"Women over age 65 have some of the highest poverty rates in the country," he said. "They need every dollar coming to them."

One big message Doherty wants advisors to convey to clients is to stop worrying about the future of the Social Security program. It isn't going anywhere.

"There are some long-term funding issues, but they’re not as insurmountable as people think," he explained. "In fact, the math to fix it is fairly easy."

The "worst case scenario" is Congress does nothing. In that case, by the year 2035, SSA will have to reduce everybody’s benefits by about 22%. Once they do that, Social Security is on "sound financial footing" to meet all its benefit obligations through 2093, Doherty said.

"I think the politicians are going to get around to (fully funding Social Security) one way or another," he added. "I call Social Security the greatest anti-poverty program in the history of this country, maybe in the history of the world."

InsuranceNewsNet Senior Editor John Hilton has covered business and other beats in more than 20 years of daily journalism. John may be reached at john.hilton@innfeedback.com. Follow him on Twitter @INNJohnH.

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