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Social Security Filing Options: How You Can Maximize Your Benefits

August 23rd, 2017

Social Security Filing Options: How You Can Maximize Your Benefits

There are many things in life that should be simple. For example, receiving what you worked for. Although it shouldn’t be, the social security filing process is complicated. In 2015 Congress made some changes to social security laws to cover some of the loopholes in spousal and retirement benefits. This means that you can no longer receive benefits on your spouse work record while yours are suspended. Of course, there are exceptions to these rules. Not only are there exceptions to the rules, but also there are strategies you can employ to maximize your social security benefits for the retirement you deserve.

The first thing to keep in mind when it comes to social security benefits is that when you file for one benefit, you are “deemed” to have filed for all benefits you eligible to receive. For example, if you filed for retirement benefits and you are also eligible for spousal benefits, you will be deemed for both retirement and spousal benefits — you will receive the higher of the two benefit amounts.

If you file for benefits, you will begin to receive the higher of the two benefits you are entitled to, unless you suspend them.

Solution

Patience has always been and will continue to be a virtue that pays back, literally. The best way to maximize your social security benefits is to delay them until you reach retirement age. While you can begin receiving social security benefits at age 62; if you wait until age 66 — the full retirement age — you will get 25% more. And if you wait until age 70 before you file, you will receive 32% more. For example, if you are entitled to $1,000 a month in social security benefits at the age of 66, you will get $1620 if you wait until age 70. This means that your benefit will increase by 8% each year if you wait beyond your full retirement age.

Of course, some people can benefit from taking social security benefits before full retirement age. If you have serious health problems or short life expectancy, you can benefit from taking social security benefits prior to full retirement age. There is no reason to delay taking benefits if you cannot live past 70.  If have chronic illness instead of drawing retirement income from your nest egg, it makes sense to take social security benefits and allow your investment portfolio to grow. You may need the money for out-of-pocket medical bills.

If you are single or divorced, the best option is to delay receiving benefits until after your full retirement age. If you are married for at least 10 years, you are eligible for spousal benefits; you can choose to suspend your retirement benefits while you receive benefits on your spouse‘s account. If you are widowed, you may start your survivor’s benefits independent of your retirement benefits. If you are disabled, you can collect disability benefits 10 years before your full retirement age.

Receiving benefits on someone else’s record

If you were born before January 2, 1954, you can still receive spousal benefits while you delay your own payment.

If you and your spouse are eligible for retirement benefits, the younger of the two of you can choose to suspend his or her benefits while receiving spousal benefits.

If you are divorced and turned 62 before January 2, 2015, you can still receive spousal benefits and suspend your own benefits.  Even if your ex suspends his or her benefits, you can still receive spousal benefits based on their work record.

If you were born after the above stated date, if you file for retirement benefits you will be effectively be filling for all types of benefits including spousal and retirement benefits.  If you defer your benefits, your spouse will not be able to receive benefits on your record.

Factors to consider when filing for social security

Social security is complex and confusing to most people. With over 2,700 ways to file for social security benefits, it is always the best to seek professional advice.

If you do not meet any of the eligibility criteria stated above, you need professional guidance to help ensure you get social security right.

While the primary motivation to delay retirement benefits is to grow your benefits, there are other factors to take into consideration such as the ones listed below.

  • If you have children, who depend or receive benefits based on your work record, they will no longer be able to receive benefits while your own benefit is in suspension.
  • If you suspend your benefits, other benefits you are entitled to will also be suspended. For example, if you suspend your retirement benefits, you will not be able to receive spousal benefits.

In conclusion, there is no one-size-fits-all approach when it comes to social security benefits. If you find social security rules bewildering, feel free to reach out to David Ortiz Advisors with your questions/inquiries. At David Ortiz Advisors, we don’t use a cookie cutter approach to creating our clients retirement plans. We treat every one of our clients like family, and take a hand-in-hand step by step approach to maximizing your retirement. This process almost always starts with carefully maximizing your social security. Call us now so we can start you on the path to the retirement you deserve and ensure that you Plan Smarter and Live Better.