When it comes to Social Security benefits, very few retirees are actually aware of the options they have to maximize their benefits and payments. Most assume that they’re going to get what they get and that number can’t be changed. Also, since Social Security administration employees don’t know nearly as much about complex rules as they should, it’s even harder to find out the exact strategies available to you.
There are a number of them however, and they are outlined for you below. Enjoy.
The first Strategy is “File and Suspend”. In this scenario, one spouse is the primary breadwinner and is looking to work a few years longer but the other, lower earning spouse, is going to retire. What the former would do is apply for benefits but then suspend on collecting them, which would allow the latter spouse to collect one half of the former’s benefits immediately. Although the spouse who continues to work won’t receive any Social Security checks, the upside is that those checks would continue to increase at about 8% per year until they reach the age of 70.
Here’s an example, using the wife as the lower earner. Scenario #1: Wife takes her own benefit now, at age 66, at $1,299 per month. $1,299 x 12 months x 20 years = $311,760 collected over 20 years Scenario #2 with file and suspend spousal benefit strategy: Wife collects spousal benefit for 4 years at $1,150 per month. ($1,150 x 12 months x 4 years = $55,200) Then at age 70, she collects her own increased benefit at $1,700 for the next 16 years. ($1,700 x 12 months x 16 years = $326,400) $55,200 + $326,400 = $381,600 collected over 20 years. The difference between the two scenarios: $381,600 – $311,760 = $69,840
Strategy #2 is called “Restricted Application”. Similar to file and suspend, Restricted Application is ideal for married couples that have similar incomes and, like the first strategy, one wants to retire while the other continues to work. With this strategy the spouse who wants to retire will claim their Social Security benefit and let their working spouse file the so-called restricted application, letting them collect spousal benefits. The working spouse can then continue to work and earn money and their retirement benefits will grow by 8% until they reach the age of 70.
One strategy that many retirees have no idea about is the “Widower Benefit”. This benefit can be claimed if either the husband or wife passes away, allowing the surviving spouse to collect benefits starting at age 60. The plus to this strategy is that the remaining spouse will always be entitled to the higher benefit, whether it was theirs or their spouses. This will remain so until they pass away, meaning that they will get the higher of the two benefits for the rest of their life.
The final strategy is often referred to as the “Revenge strategy”. It refers to collecting benefits from your ex-spouse when you reach your full retirement age, even if they have remarried. They have to be at least 62 and, in order to collect, you also have to have remained single. If those criteria are met, you can start collecting Social Security benefits as an ex-spouse once you reach your full retirement age.
More than likely these are strategies that you haven’t heard of, or at least some of them are, and hopefully will help you to get the most out of your Social Security benefits and checks.