Most Americans don't know that they may increase their Social Security pension:
- they think the only decision they have to make is - when to start collecting:
--- either when they are first eligible at age 62, or
--- later (as late as age 70), when their payments will be bigger.
- But married couples have 81 different ways to collect Social Security
- The finance magazine "Kiplinger's" says you can bump up your payments by as much as $100,000 over the course of your retirement.
- What I'm going to explain is public information, which can be obtained directly from the Social Security Administration
"Spouse Benefits" provision
- "Kiplinger's" columnist Mary Beth Franklin estimates this strategy can boost your income from Social Security by more than 30%.
- Most people assume when they retire, they'll be collecting benefits based on their own work history.
- However, the government also offers "spouse benefits," which entitle you to collect a monthly check
- worth up to 50% of whatever your spouse is collecting
Here is how the Spouse Benefits work:
1. one member of the couple (let's say the wife) files for benefits as soon as she is eligible. Right now, that's at age 62.
2. Simultaneously, the husband files for spousal benefits at 50% of hers.
- The husband does NOT file for his benefits when he is eligible…
- Instead, he waits to reach full retirement age (of say 70)
- He delays filing for his own 100% benefits.
- The longer he waits to file, the more his benefits will be worth.
3. Once the husband's benefits are maximized (at the age of say 70)
- he files for his own benefits.
- The wife is then able to "step up" her own benefits to the higher payout
- She can collect her own benefits + file for the spouse benefits… up to the total amount that her husband collects
Example: this is the secret Timothy W. and his wife Marilyn used
- Marilyn wanted to collect Social Security as soon as she was eligible
- but Timothy wanted to keep working until he was 70
- So Marilyn filed for benefits
- When Timothy realized how the system works, he filed to get "spouse benefits" worth 50% of what Marilyn collects
- As Timothy told Kiplinger's:
--- "I never dreamed that I could draw spousal benefits.
--- I submitted my application
--- And within 10 days, I had received a check for $2,760
--- retroactive 6 months back"
- Timothy and Marilyn added an extra $700 a month to their income… that's $8,400 a year.
- When Timothy reaches age 70, he'll file for his own benefits
- Marilyn will get Timothy's spouse benefits (+ continue receiving her own)
- And they'll collect an even higher payout.
- What's also good is: if Timothy dies first
--- his wife will get a much bigger benefit, than she would have received,
--- if they had both started collecting their Social Security as soon as they became eligible.
According to a report from the Boston College Center for Retirement Research
- titled "Strange But True: Claim Social Security Now, Claim More Later"
- typically, the higher-wage earner should collect "spouse benefits", when eligible…
- and delay his or her own benefits to let the payout build up
Assuming the wife was the lower-wage earner, the way to maximize your total benefits is
- to have the wife claim benefits at age 62 &
- the husband delay until he is 69 years old.
- And as an added bonus:
--- the spouse, receiving spousal benefits, can receive a check for up to 6 months of retroactive benefits
--- but the claim can only be filed after the recipient is 66 years old
--- Social Security won't pay retroactive benefits, if you're younger than 66.
--- This means you can add another 6 months of payments (at 50% of the benefit) to your income.
--- Just tell the Social Security representative you want to apply for retroactive benefits.
Does this strategy work for you?
- You must be married.
- At least one of you must be healthy enough to delay claiming benefits until age 69
- And both spouses must have an earnings history
- The Boston College study found that the higher and more equal your earnings, the more you have to gain.
- One thing to keep in mind: If you start collecting Social Security or spouse benefits before you turn 66,
- you're locking in a permanently lower % for your spouse benefits.
WHAT TO DO
- If the numbers make sense, call the Social Security Administration's toll-free number: 800-772-1213.
- Set up an appointment with a representative at your local Social Security office
- Have them work through the possibilities with you,
- and take advantage of this extra money.
- To prepare for your visit, I recommend you read the SSA's site on how to apply for spouse's benefits
- which you can read right here: http://www.socialsecurity.gov/forms/ssa-2.html