“Many American workers plan to rely on Social Security benefits as a steady source of income in retirement. If you are not on top of things, you are at risk for not using the right claiming strategy. If that happens, you could leave thousands of dollars on the table over your lifetime.”
If you're nearing retirement—or even if you’ve already retired—make sure that you are not forgetting the strategies discussed in CNBC’s recent article “Get a bigger check by using these Social Security claiming strategies.” Let’s take a look at what can be done to get more money in your monthly check.
- Cancelling Social Security payments. Stopping your checks may actually pay off in the long term in some situations. If you claim retirement benefits at the earliest age possible (62), you take a permanently reduced benefit. It’s about 75% of what you are entitled to based on your earnings record. However, if you wait until full retirement age (66 or 67), depending on when you were born, you’ll get your full benefit. If you delay your benefits even longer, you get an 8% bump for every year you wait up until age 70. In all, that’s a potential increase of 32%. If you take Social Security benefits early at 62, you can still change your mind once you reach full retirement age.
- Filing based on your spouse's record. A 2015 law permanently limited a number of retirement strategies available to beneficiaries. However, one strategy—a restricted benefits application—has been grandfathered in for certain claimants. The key date is January 1, 1954. If you were born on that date or earlier, you can still take advantage of this. Therefore, if you are eligible for benefits on your spouse or ex-spouse's record, you can file for spousal benefits at full retirement age and allow your own retirement benefits to grow until age 70. To do this, your spouse must qualify for retirement benefits. However, you can’t let one spouse file for benefits, based on another spouse's suspended record.
- Claiming surviving divorced spousal benefits. If it's been some time since you divorced, you could still be eligible for divorced spousal benefits if your ex dies, provided you didn’t remarry before age 60.
- Collecting benefits with an earnings penalty. There’s a penalty if you collect retirement benefits and continue to work, based on your age. If you are under full retirement age, for every $2 you earn above that threshold, the Social Security Administration deducts $1 from your benefit payments.
Reference: CNBC (December 11, 2018) “Get a bigger check by using these Social Security claiming strategies”