Do you want to maximize your Social Security? Unfortunately, maximizing your social security is not so straightforward. Time is running out on some key strategies. This is especially true if you were age 62 by December 31, 2015. These strategies can have a significant impact on couples and women who will be widowed or had been married for at least 10 years. It is well-known that the majority of women are paid less money than a man for the same job. Women often have inconsistent work histories due to raising children or taking care of an aging parent or in-law. This typically leads to lower payouts than a spouse or ex-spouse.
Social Security 2015 changes limit options
A budget bill signed into law in November 2015 got rid of several popular claiming tactics. It’s been our experience that only a few people seem to even know about them. There is a grandfathered period until the bill is enacted on April 29 where the popular file and suspend tactic is still available.
Laurence Kotlikoff, an Economics Professor at Boston University and an expert in Social Security is often interviewed on the topic. He notes that “the new law is a little tricky to understand”. That is an understatement for the rest of us.
Kotlikoff “secrets” to maximize retirement benefits under the new rules1
You likely are familiar with your statement’s three retirement focused claiming options. An early option, a full retirement option (typically thought of as age 65) and a delayed benefit at age 70. Many people choose to take their benefits early for any number of reasons. However, that permanently reduces their lifetime payout as compared to claiming at age 70. This information alone does not help determine how a couple may maximize their combined payouts and/or individuals eligible on an ex-spouse’s record. That is where Social Security planning comes into play. Savvy financial planners and informed retirees have been able to find strategies such as file and suspend to maximize their payout and enhance their retirement income.
Kotlikoff notes that there are millions of people who were still eligible for the strategy. “One’s spouse needs to be pretty close to 66 or over 66 to file and suspend,” Kotlikoff said. “And the other spouse has to be over 62 by the end of this year (12/31/2015). Moreover, divorcees (married for a minimum of 10 years) who were 62 by the end of last year will likely be able to collect a full spousal benefit.”
These are just a partial list of Social Security considerations:
- When to apply for spousal benefits?
- Should you suspend your benefit?
- Should you divorce and remarry?
- What should a widow do?
Questions relevant to your situation should be analyzed before you make (or someone you love makes) an irrevocable decision that has potentially harmful financial effects.
Are you taking advantage of Social Security’s ability to hedge your longevity risk?
Are you fully taking advantage of Social Security’s ability to hedge your longevity risk? We are all living longer. In fact, no one knows how long any of us will live and how healthy we may be. The author of this blog’s now 87-year-old mother is healthier than her sister was at the same age who lived to age 92. One thing is for sure she does not want to go back to work. I assume you would not want to either. As you may now have surmised your options for maximizing Social Security may not be straightforward.
Let us help you (or someone you love) maximize your Social Security
That is why Envision Wealth Planning licensed Kotlikoff’s Maximizing My Social Security software. A testament to the complexity of Social Security is that Maximize My Social Security states “that we are not financial planners”. However, we are CERTIFIED FINANCIAL PLANNER™ professionals. James Brewer, is also an Adjunct Professor at the College for Financial Planning teaching courses for students pursuing the Chartered Retirement Planning Counselor SM and CERTIFIED FINANCIAL PLANNER® professional designations. Contact us so that we can complete a Maximize My Social Security analysis for you. Why would you risk leaving money on the table that is there for you to rightfully claim?
- Think Advisor, Kotlikoff 10 Ways to Maximize Social Security Benefits Under New Law, December 2, 2015
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.