The foregoing is a re-post of an article that I wrote which was included in The Motley Fool’s Rule Your Retirement newsletter. Enjoy! Want to double a chunk of your retirement income? It’s easy — just delay taking Social Security by about six years! OK, so it’s not really that simple. The time to apply for Social Security benefits is different for each individual; there is no magical “best age” for everyone. Thus, to maximize your benefit, it’s important to understand the consequences of choosing to apply at different ages. It all starts with the most important age: your full retirement age, or FRA (see table below). If you receive your Social Security retirement benefit before your FRA, the benefit will be reduced. The biggest reduction is at age 62, the earliest you can begin receiving benefits (except for widows and widowers, who can begin survivors’ benefits at 60). Year […]
file and suspend
Increase Your Social Security Benefit After You’ve Filed: File and Suspend Doesn’t Have to Be All at Once
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. We’ve discussed the File and Suspend activity many times on this blog, but most of the time we refer to the activity as happening all at the same time. This is because very often we’re talking about one spouse setting the table for the other spouse to begin receiving Spousal Benefits. There is another situation where File and Suspend could be used – you could earn delayed retirement credits after you had already started receiving your retirement benefits by suspending your benefit. You must be at least Full […]
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The Restricted Application for Social Security Spousal Benefits
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. One provision of Social Security benefits that is relatively unknown is the restricted application for Spousal Benefits. This provision allows a person to apply for benefits based upon his or her spouse’s record while delaying receipt of benefits based upon his or her own record. The restricted application is only available when three factors have been met: 1 – the individual filing the restricted application has reached Full Retirement Age (FRA); and 2 – the individual has not filed for his or her own Retirement Benefit; and 3 […]
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Important Factors When Planning Social Security for Couples
Planning for Social Security benefits for a couple can be complicated. There are many factors to consider, including the amount of benefits each member of the couple is entitled to at various ages, as well as the relative ages of the spouses to one another. Other factors include whether or not one member of the couple (or both) will earn wages past age 62, as well as longevity: the potential of the couple (at least one member) living past normal life expectancy. Longevity is one of the most important factors to consider – and for a couple this isn’t as straightforward as it is for one person. According to the National Association of Insurance Commissioners’ Annuity 2000 table, a couple who are both age 50 stand a 50% chance of one member living to at least 91 years of age. For another example, if the husband is 62 and the […]
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Social Security Spousal Benefit Calculation Before FRA
Jane’s Double Twisted 3D stars2_rev (Photo credit: mimickr) How is the Spousal Benefit calculated? I’ve covered this topic in several prior posts, but thought I’d give it another shot, to hopefully close this chapter for now. I’ve heard conflicting answers from various corners of the SSA world – both personally and from reader communications. Too often there is a pat answer that the Spousal Benefit, if taken at FRA (Full Retirement Age) is always 50% of the other spouse’s PIA (Primary Insurance Amount). This is not always the case, if the individual has begun receiving retirement benefits based on his or her own record before FRA and then later begins receiving the Spousal Benefit. When an individual begins receiving retirement benefits based upon his or her own record has a lasting effect on the amount of all retirement benefits that this individual will receive, including Spousal Benefits. This is due […]
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One More File and Suspend Option
Image via Wikipedia We’ve discussed the file and suspend option in multiple articles, but did you know that there is one more option for file and suspend. This is one that provides you with the opportunity to earn delayed retirement credits (DRCs) on your Social Security benefits, even if you started receiving benefits early. File and suspend is generally an option that is used by a married couple – providing a method by which one of the two can receive Spousal Benefits while the other delays receiving benefits until later, earning DRCs. (For more on this, see this article on Spousal Benefits.) This additional option is available at Full Retirement Age (FRA), just like otherwise. But what’s different about this is that the suspend option is used when you’ve already been receiving benefits, most likely early at a reduced rate, and by suspending at FRA you make yourself eligible to […]
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The Mystery of Social Security
Social Security has become a significant part of many retirees’ sustenance, ever since it was first introduced back in the 1930’s. As the traditional pension plan goes the way of the buggy-whip and common investor behavior leads to poor results in savings plans (if there are any savings at all!), the Social Security benefit becomes more and more important. Unfortunately, the way Social Security works is a mystery for most folks. There’s really not much in the way of guidance for using the system, and relying solely on the phone representatives from the Social Security Administration is bound to lead you to a less-than-optimal result. As with most financial activities, it pays to learn as much as you can about your options, possible strategies, and the pluses and minuses of various choices that you make. A Social Security Owner’s Manual is an attempt at providing you with the groundwork to […]
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A File and Suspend Review
Note: with the passage of the Bipartisan Budget Act of 2015 into law, File & Suspend and Restricted Application have been effectively eliminated for anyone born in 1954 or later. If born before 1954 there are some options still available, but these are limited as well. Please see the article The Death of File & Suspend and Restricted Application for more details. I get a lot (a LOT) of questions about the File and Suspend tactic for Social Security benefits, so I thought some more review would help. For the uninitiated, File and Suspend is a tactic that married couples can use to help maximize their total Social Security benefits. In this post I’ll try to cover some of the more common questions. File and Suspend works like this: One of the two in the couple can file an application for Social Security benefits and then immediately suspend in order […]
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SSA Revises Withdrawal Policy
On December 8, 2010, the Social Security Administration published a revision to their “withdrawal policy”. It’s important for you to know what has changed about this rule, especially if you have been counting on this in your planning for Social Security benefits. You can see the actual text of the SSA’s announcement 20 CFR Part 404 by clicking here. What’s Changing? Essentially SSA has decided that this rule, as it stood, represented a little too good of a deal, even though very few people ever took advantage of it. The rule, in brief, allowed an individual to begin taking retirement benefits at any age, and then at any point in the future the individual could pay back all of the benefits (without interest) and re-set his or her beginning date for receiving benefits. This strategy allowed the individual to receive benefits and invest them, then pay back the entire amount […]
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