You might have your doubts concerning the future of Social Security. However, when to claim benefits can be one of the most important decisions most people will make about their retirement. And the most costly!
The decision for a single person is more direct - now or later. Take the benefit at 62 (75% of full benefit) if you retire early, at Full Retirement Age (100% of benefit), or defer until age 70 (132% of full benefit). As in all decisions about Social Security, it’s a trade off: Lower benefits now paid for a longer period or higher benefits later for a shorter period. The question is how long you will live to collect benefits.
For a married couple the decision is more complex. Making the decision complex are the working history of each spouse, spousal and survivor benefits and the decision of when to elect. There are numerous possibilities and the purpose of this post is only to present “Switch Strategies”:
Option #1: Restricted Application
The higher earning spouse files a restricted application for only spousal benefits at 66, allowing their own benefit to continue to build delayed retirement benefits until age 70. At the same time, the lower earning spouse files for benefits under their own earnings record, making spousal benefits available for the higher earning spouse. This option works best for married couples who have reached full retirement age.
Option #2: File and Suspend
The higher earning spouse files for benefits at age 66, then immediately suspends benefits, allowing their benefit to continue to build delayed retirement benefits until age 70. In the process, they would have made their spouse eligible for spousal benefits under the higher earners record. This would also work for married couples reaching full retirement age.
What’s At Stake
With variations to these techniques and 81 possible age combinations, there are hundreds of possible options. To find out what’s at stake for you, visit enjoylivingbenefits.com It only takes a couple of minutes to find out the difference between a good and poor decision in regards to claiming social security benefits can be.
Nearly two-thirds of baby boomers say Social Security is an “extremely” or “very” important source of retirement income. Income from pensions, 401k, annuities, other investments and income sources should also be considered when planning to claim your Social Security benefits. Delaying Social Security benefits makes sense if you retirement income from other sources is adequate to meet your lifestyle needs.
Also consider these suggested options are only one step in developing an overall strategy for retirement. Spend some time with a professional who can show you how these Social Security strategies can work, providing real numbers for the analysis. You also want to consider insurance options and annuities that can provide protection and an additional income source if Social Security benefits are deferred.
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