Tips for Maximizing Your Social Security Benefits
Social Security is an important safety net that is part of the income mix for many older Americans after they retire. The actual monetary benefit you get from social security depends on several factors, one of which is how old you are when you begin to draw on the system. If you take the time to educate yourself about the rules that apply to Social Security, you may be able to insure that you get the largest possible benefit available to you.
According to Kiplinger.com, your age at the time you start collecting benefits determines whether or not you are subjected to a benefits reduction. Everyone who is eligible for Social Security can start collecting benefits at age 62. However, you will not get the full retirement benefit if you start collecting at age 62. Those individuals born between 1943 and 1954 must wait until age 66 to receive the full retirment benefit from Social Security. Those born in 1960 or after must wait until 67 to get the full retirement benefit. If you were born between 1955 and 1959, the age for full retirement benefits is between 66 and 67. Reductions in benefits for those who don’t wait until full retirement age are variable, and can go as high as 25%.
2. Spousal Benefit
If you are married, and your social security benefit is lower than that of your spouse, it may be worthwhile to take what is called the spousal benefit. For the spouse with the lower social security benefit, the spousal benefit can be as high as 50% of the benefit of the spouse with higher social security. In some cases, this 50% benefit can be higher than the benefit that the lower-benefit spouse would have received on his/her own. In order to get the full 50% benefit, however, three conditions must be met. First, the spouse with the higher benefit must have applied for his/her social security benefits. Second, The spouse with the lower benefit must wait until full retirement age to apply for the spousal benefit. Third, the spouse with the lower benefit must take the spousal benefit from the start of the collection of social security checks.
3. Delay Benefits
If you are age 66 or 67, and therfore eligible for the full social security retirement benefit, you can elect to delay benefits up until age 70. If you are able to do this, you will realize a benefit increase of 8% for each year up to age 70. If there are cost-of-living adjustments to social security during the years that you delayed benefits, you will get them at age 70 when you start collecting checks.
4. File Then Suspend
Even if you want to maximize benefits by putting off social security until age 70, you can still give your spouse a chance to get spousal benefits based on your social security benefit. This is particularly valuable if the benefit your spouse would get on his/her own would be less than the spousal benefit. When you are at full retirement age, you can apply for social security and then put a suspension of benefits into effect immediately. This means that your spouse can get the higher spousal benefit, and your benefit will increase 8% per year until age 70.
Every individual needs to think carefully about when to take social security benefits. According to the rules governing social security, being married and delaying benefits as long as possible after age 62 can lead to significant increases in your total benefits.
Lindsey Samuelson writes about finance, aging & more at www.grouphealhtinsurance.org.