For the vast majority of Americans, Social Security provides an indispensable source of income during their golden years. Spanning roughly two decades of annual surveys from national pollster Gallup, between 80% and 90% of current retirees rely on their monthly payout to cover some portion of their monthly expenses. Meanwhile, 76% to 88% of working Americans believe they'll need Social Security income to make ends meet during retirement.
This vital source of retirement income is available to any American citizen who earns the requisite 40 lifetime work credits -- and that includes the President of the United States, Joe Biden.
President Biden delivering remarks. Image source: Official White House Photo by Adam Schultz.
Here's when Joe Biden began taking his Social Security check
For the past half-century, the vast majority of presidential candidates (and eventual presidents) have made their federal tax returns public, and the Bidens are no exception. Joe Biden and first lady Dr. Jill Biden, who file their tax returns jointly, reported receiving $58,465 in Social Security benefits in calendar year 2022. Since the Bidens generate quite a bit of taxable income, they were also taxed on $49,695 of their benefits last year.
Due to Joe Biden vying for the Democratic Party presidential nomination on a couple of occasions, 25 years of his and his wife's federal tax returns are publicly available. Tracing backwards, I was able to locate the year, and therefore age, where Joe Biden began receiving a Social Security retired worker benefit.
According to line 20a of the Bidens' 2008 Form 1040, $6,534 in Social Security benefits were recognized. The reason 2008 is so important is because it marked the year Joe Biden turned 66 (the president's birthday is Nov. 20, 1942). In other words, it was the year Joe Biden reached his full retirement age, which entitled him to 100% of his retired worker benefit.
The relatively small payout the Bidens received in 2008 ($6,534) provides further confirmation that Joe Biden waited until his full retirement age to begin receiving a benefit.
Did Joe Biden make the best Social Security claiming choice?
The big question is: Did the president make an optimal claiming decision by taking his benefit at age 66?
One look at the $58,465 he and his wife received in 2022 would have you believing he did pretty well. Since the Social Security Administration accounts for a worker's 35 highest-earning, inflation-adjusted years when calculating their monthly benefit at full retirement age, Joe Biden's well-above-average income over multiple decades has resulted in a beefy Social Security check.
But when the final numbers are tabulated, Joe Biden's claiming decision may ultimately prove suboptimal. It was, perhaps, the correct decision for him and his wife to make at the time, but taking Social Security benefits at age 66 more than likely won't result in the maximum lifetime benefit.
Although taking benefits at age 66 allowed Joe Biden to generate additional income earlier than if he had waited until age 67 through 70, there comes an inflection point where waiting longer would have resulted in a higher lifetime benefit. Joe Biden is currently 80 years old. Generally speaking, people who live past 80 benefit -- when I say "benefit," I mean receive more lifetime income from Social Security -- from a later claiming age.
In 2019, investment company United Income released a report that examined Social Security beneficiary claims data from the University of Michigan's Health and Retirement Study. The purpose of this study was to determine if beneficiaries ultimately made an optimal claiming decision.
What United Income found was an almost perfect inversion of claiming ages and optimal claiming decisions. Although most recipients took their benefits early, just 6.5% of back-tested claimants made the best choice by taking their payout at ages 62 or 63. Comparatively, 57% of claimants would have made an optimal choice in waiting until age 70. Ages 67 and 69 were the next-best claiming ages, with each age resulting in an optimal choice around 10% of the time.
Chances are that the president will be leaving Social Security income on the table by claiming at age 66 instead of waiting even longer.
Image source: Getty Images.
Making an optimal Social Security claim is difficult
But deciding when to take Social Security is a bit of a crapshoot that involves science and luck. Without knowing our own expiration date, it's impossible to know ahead of time if we've made the optimal claiming decision. The best we can do is rely on health, financial, and marital factors to help with this key choice.
As an example, a person in good or excellent health whose parents and/or immediate family members lived to be 80 or older might be best waiting until after their full retirement age to begin receiving their Social Security check. Conversely, a person with one or more chronic health conditions may generate more lifetime income with an earlier claim.
These same pros and cons can be weighed based on your financial status at or near retirement. For instance, if you have very little saved for retirement, there's a good chance you'll be relying on Social Security as a major source of income. In this instance, waiting until age 70, assuming you're in good or excellent health, will maximize your monthly payout and give you the best chance to generate the highest amount of lifetime income from the program.
Even marital status comes into play when claiming Social Security benefits. If you're single and have no young children, your claiming decision only affects you. But if you have a spouse, claiming benefits prior to reaching full retirement age can adversely impact what your spouse will receive as a survivor benefit if you pass away.
Everyone's situation is unique. Just remember that a later claiming age has, historically, put more money into retirees' pockets over the long run.
