“There are dozens of lesser-known, often overlooked Social Security tactics and strategies that can be used to increase your Social Security income.”  – Ernest Hathaway

Social Security Strategies to Maximize Payout

Many people can get more money from Social Security if they will take the time and effort to learn what is available to them.   Here are some sample strategies that you could evaluate with your Certified Financial Planner™.

Strategy – Wait.  Don’t fall into the trap of starting Social Security at age 62 just because you can.  You’ll take a big reduction in the amount of your payout in order to take it early.  For every year that you delay, the payout goes up between 5% and 8% per year – not bad returns on investment these days.  If you’re thinking about when to start Social Security, meet with your CFP® first to make sure you understand the financial implications.

Strategy – Coordinate with Potential Income.
If there is any possibility that you might go back to work, or that you might start your own business, or that you may even get a part time job to supplement your retirement income, you should realize that there is a substantial IRS penalty for earned income over a minimum threshold if you take early benefits.  Meet with your financial advisor before making this decision.

Strategy – Spouse Consideration.  By waiting, you not only increase your benefit, but you may also increase the benefit you leave behind for your spouse.  Remember, the surviving spouse takes over the largest benefit.  This can be a particularly beneficial strategy if your spouse is younger and may receive that benefit for many years.

Strategy – File and Suspend.  This one is a major benefit if only one spouse has a substantial work record.  At your full retirement age, you can file for, but then suspend, your benefits so they can grow by 8% a year until age 70.  Meanwhile, this allows your spouse to receive a spousal benefit based on her age, even if she is not entitled to much on her own.  Later, you can activate your own benefit at a higher rate.

Strategy – Some Now, More Later.  This works best when both spouses have a good work record and one has reached full retirement age.  If you are thinking of delaying your payments in order to get more per month, consider filing for spousal benefits in the meantime, and then switching to your own when you reach 70.

Strategy – File, Suspend, and More Later.  If spouses are about the same age, and both qualify on their own, they can both file and suspend at full retirement age, each claiming a spousal benefit on the other.  Their own amounts continue to grow until age 70 when they then switch to their own higher amounts.

Strategy – Divorced Singles.  While there are some restrictions, a single divorcee may claim on his/her ex-spouse’s entitlement, regardless of the ex’s marital status or whether they have claimed benefits yet.

Strategy – Widows and Widowers.  A surviving spouse can take over a deceased spouse’s benefit if it is greater than their own.

The Best Strategy – A Plan.  Meet with a Certified Financial Planner™ who is a Social Security specialist that can determine the best strategy for your situation.  This decision is both complex and crucial.  A few dollars invested before retirement in a Social Security plan can pay off up to 100-times in additional benefits that you collect.

dreamstime_xxl_26555499Social Security is critical to your retirement:

  • It is a substantial source of stable income,
  • It is guaranteed for your whole life, and
  • It is guaranteed to increase over time.

How to Get More from Social Security:

  • Plan carefully when to start
  • Avoid costly but common mistakes
  • Special strategies for divorced and widowed people
  • Tactics for couples with a larger age difference
  • Control how taxable your benefits are
  • The future of Social Security

When to Start Social Security

Sometimes you don’t have a choice. You need to start Social Security as soon as possible in order to survive. But if you do have a choice, here are the key questions that you should ask yourself and discuss with your Certified Financial Planner™.

Is there any chance that I will earn income?
If there is any possibility that you might go back to work, or that you might start your own business, or that you may even get a part time job to supplement your retirement income, you should realize that there is a substantial IRS penalty for earned income over a minimum threshold if you are less than full retirement age. Meet with your financial advisor before making this decision.

What is my life expectancy? How healthy are you? What about your spouse who could assume your benefit?
A longer life expectancy of you or your spouse means you should postpone benefits. If you believe you’re both going to die soon, then you should start your income benefits as soon as possible.

How badly do I need income right now?
We could all use income, but if you can afford to postpone it, the monthly amount will be larger when you do start.

Would I jump at the opportunity to invest at a guaranteed rate of 5% to 8%?
If so, you and your Certified Financial Planner™ should consider the similarities between such a hypothetical investment and postponing your Social Security retirement benefits.

Will my spouse need more money after I am gone?
 By waiting, you not only increase your benefit, but you also increase the benefit you leave behind for your spouse. Remember, the surviving spouse takes over the largest benefit. This can be a particularly beneficial strategy if your spouse is younger and may receive that benefit for many years.

Is there a big difference between my and my spouse’s benefit amounts?
If only one spouse has a substantial work record, ask your Certified Financial Planner™ to analyze the benefit of using the file-and-suspend strategy. At your full retirement age, you can file for, but then suspend, your benefits so they can grow by 8% a year until age 70. Meanwhile, your spouse can receive a spousal benefit based on her age, even if she is not entitled to much on her own. Later, you can activate your own benefit at a higher rate.

Are both spouses entitled to about the same amounts?
If both spouses have a substantial work record and at least one has reached full retirement age, there is a strategy you should discuss with your Certified Financial Planner™. If set up correctly, you can receive spousal benefits while your own benefit continues to grow at 8% per year. Then when your reach age 70, you can switch to your own higher benefit.

Are both spouses about the same age?
If spouses are about the same age, and both qualify on their own, you should talk to your financial advisor about the possibility of both of you doing a file and suspend at full retirement age, each claiming a spousal benefit on the other. Each of your own amounts will continue to grow until age 70 when you then switch to your own higher amounts.

Am I divorced and still single?
While there are some restrictions which your CFP® can review with you, a single divorcee may claim on his/her ex-spouse’s entitlement, regardless of the ex’s marital status or whether they have claimed benefits yet.

Has my spouse died?
A surviving spouse can take over a deceased spouse’s benefit if it is greater than their own.

Could I benefit from a thorough Analysis?
Meet with a Certified Financial Planner™ who is a Social Security specialist that can determine the best strategy for your situation. This decision is both complex and crucial. A few dollars invested before retirement in a Social Security plan can pay off up to 100-times in additional benefits that you collect.