Following the post-COVID stimulus hangover in 2022, the bull market has continued to run. One of the key factors was the Federal Reserve’s decision to
Maximizing Your Social Security Claim: Do You Know All Your Options?
Published Date : January 13, 2014
A neighbor growing up used to say that the “best thing about retirement is Monday morning.” While this may be true, as I write this – knee deep in a work day morning – it occurs to me that having a strategy that maximizes your social security benefits is another more tangible perk of retirement.
There are a myriad of “lesser known” social security strategies that may be of benefit depending on your circumstances. Since there isn’t a “one size fits all” solution, your social security strategy can be as unique as your family tree. Considerations like family longevity and work history are important factors in determining the best social security strategy for you as a single person or for you and your spouse as married individuals.
Full retirement age (FRA), defined as the age when you are first entitled to full benefits, had been 65 for many years. Thanks to modern medicine and IRS actuarial tables, beginning with people born in 1938 or later, full retirement age gradually increases until it reaches 67 for those born after 1959. Many people grab at their social security the minute they reach full retirement age (and some seek it out prior to FRA), not knowing that entitlements increase every year that you hold off on accessing your benefits. If you are able to, delaying the filing for benefits after you reach full retirement age equates to an annual 8% growth on your benefit dollars (for people born after 1943), which gives a retiree born between 1943 and 1954 the ability to claim 132% of full retirement benefits by waiting to age 70.
Let’s take a look at the specific strategies by marital status:
Singles: The rule of thumb is an individual with a long life expectancy should delay taking benefits for as long as possible to age 70 to build the greatest return on your social security benefits over time. If the life expectancy is shorter, the better strategy is to take benefits at full retirement age.
Married Couples: Spouses may have dual entitlement. The rules for spousal benefits are more complex but may provide a significant economic benefit to proper planning. Many couples don’t realize they may file for spousal benefits before claiming their own benefits. Married couples may get more in Social Security payments by coordinating how and when they should each begin collecting benefits. A detailed analysis of relative ages and benefits is necessary to determine the appropriate course of action.
Widowed Spouse: Widows also have dual entitlement. A widow is entitled to his or her own benefits or those of the deceased spouse. Benefits grow on the other spouse’s unclaimed benefits and a widow can receive benefits then switch to his or her own benefits or the deceased spouse’s benefits at age 70, claiming the accrued benefit for the remainder of his or her life.
Divorced Spouses: Divorced spouses are entitled to a portion of the other spouse’s benefits, with certain restrictions.
If you’ve filed for and are receiving benefits without an analysis of these options, or need to file a mea culpa to alter your current situation, you may have corrective choices. Your Sand Hill Wealth Manager can provide you with assistance in determining the best strategy to maximize your benefits.
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