Social Security Maximization: The Conversation You Shouldn’t Wait For

May 18, 2015 | Social Security Disability

Social Security Maximization – Social Security benefits are an eventual reality, if not a dearly cherished hope, for most Americans. Disability attorneys could have advice on the best way to collect benefits, but everyone has to collect at some point. The fact is, no one can stay in the workforce indefinitely, and a strong draw of working is the ability to collect benefits upon retirement. For married couples, this means balancing how long benefits will last for both spouses with a number of other equally important factors.

Social Security Maximization

Many people think of Social Security Benefits collection as merely an odds game. How long a man or woman is likely to live is balanced, and from there, couples decide when to retire. In order to maximize Social Security income, however, some people may be able to switch between spousal, survivor, and individual benefits to maximize income. There are two main strategies that seem to work the best for married couples, as many Denver disability lawyers know.

Both of the strategies require “filing and suspending” at Full Retirement Age, the age when Social Security retirement benefits equal the Primary Insurance Amount. Suspending, or deferring, once filed allows individuals to file for Social Security retirement benefits but receive checks later. The higher earner in the couple files earlier, which allows the spouse to get spousal benefits immediately. This gives the person who earns less the chance to get benefits earlier while allowing the spouse who earns more to maximize his or her benefits. This also possibly raises survivor benefits when one partner inevitably survives the other.

Related: Social Security Now Provides Online Version Of The Social Security Statement

Full Retirement Age

Full Retirement Age is an age decided by the Social Security Administration and ascribed based on the year in which you were born. If you were born before 1954, your Full Retirement Age is 66. If you were born after that, unfortunately, the Full Retirement Age comes later. The full Retirement Age can also be called the Normal Retirement Age, and it used to be 65. That is why, normally, when people think of retirement, they associate it with that number. However, in 1938 the age was raised from 65 until it reached 67 for those born after 1959. The raising of the retirement age is more than just an attempt to keep people in the workforce for as long as possible, no matter how it appears. The fact is our health as a species is improving with each generation, making retirement more and more distant with each subsequent generation. Ssa.gov has a tool for calculating the Full Retirement Age for every few generations.

Strategies

One strategy for maximizing Social Security Benefits for married couples involves the lower earner filing for and collecting reduced individual Social Security benefits before Full Retirement Age. The higher earner files and suspends at full retirement age, which allows the lower earner to file for adjusted spousal benefits. Once the lower earner gets to full retirement age, the lower earner files for unreduced adjusted spousal benefits. Then, the higher earner collects increased individual benefits at age 70 (assuming a full retirement age of 66), and if the higher earner dies first, the lower earner will receive increased survivor benefits.

The second strategy files and suspends at full retirement age, which allows the lower earner to file for Social Security benefits under spouse only. The lower earner files for and collects spouse-only benefits at his or her full retirement age. At age 70, the lower earner can file for and switch to increased individual benefits. The higher earner then collects increased individual benefits at age 70. The increased benefits will, as with the previous example, be passed on to the lower earner if the higher earner dies first.

Social Security Maximization

It is necessary to plan financially for when we pass, particularly if you are married and have people who depend on you. Sound, strategic financial decision-making can sometimes seem cold, but as we approach old age, these conversations are inevitable. Social security benefits are vital for most retirees, as are other social programs that help us keep afloat. Workers’ compensation settlements and payments, interestingly, are tax-free, so it is important to keep track of one’s finances and not live above one’s means when young so retirement is not as daunting as we approach it.

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