Some strategies are no longer available, but there are still ways to maximize benefits. The trick is knowing what to do, and when, so you don’t miss out. Make the wrong move, and you could put a strain on your retirement finances.
How can you get the most out of your Social Security check, on a monthly and life-long basis? The article from CNBC, “Get a bigger check by using these Social Security claiming strategies,” explains the steps to follow.
- Cancelling Social Security payments. Stopping your checks may actually pay off in the long term in some situations. If you claim retirement benefits at the earliest age possible (62), you take a permanently reduced benefit. It’s about 75% of what you are entitled to based on your earnings record. However, if you wait until full retirement age (66 or 67), depending on when you were born, you’ll get your full benefit. If you delay your benefits even longer, you get an 8% bump for every year you wait up until age 70. In all, that’s a potential increase of 32%. If you take Social Security benefits early at 62, you can still change your mind once you reach full retirement age.
- Filing based on your spouse's record. A 2015 law permanently limited a number of retirement strategies available to beneficiaries. However, one strategy—a restricted benefits application—has been grandfathered in for certain claimants. The key date is January 1, 1954. If you were born on that date or earlier, you can still take advantage of this. Therefore, if you are eligible for benefits on your spouse or ex-spouse's record, you can file for spousal benefits at full retirement age and allow your own retirement benefits to grow until age 70. To do this, your spouse must qualify for retirement benefits. However, you can’t let one spouse file for benefits based on another spouse's suspended record.
- Claiming surviving divorced spousal benefits. If it's been some time since you divorced, you could still be eligible for divorced spousal benefits if your ex dies, provided you didn’t remarry before age 60.
- Know how benefits are impacted by earnings. If you’re under full retirement age, still working and collecting Social Security benefits, there is a penalty. For every $2 you earn above your threshold, there is a $1 deduction taken from your benefit payment. Do the math to see if collecting these benefits when you reach full retirement age, or when you stop working, would be a better way to go.
Talk with your estate planning attorney, if you aren’t sure about how well you are managing Social Security benefits. You may also want to visit the local Social Security Administration office to learn more.
Reference: CNBC (December 11, 2018) “Get a bigger check by using these Social Security claiming strategies”