Stacy Bush, Valdosta Today Business Contributor
Most understand that waiting to claim Social Security benefits can result in higher monthly payments. However, many don’t understand that there are other ways to maximize their benefits, some of which depend on their marital status.
Understanding the strategies for maximizing your Social Security retirement income benefits should be prefaced with a review of the three basic forms of retirement benefits:
- The Worker Benefit: This is the benefit you receive based on your own personal earnings history, and for which you become eligible after 40 quarters of work.
- The Spousal Benefit: This is the benefit paid to your spouse. For non-working spouses, this is 50% of the working spouse’s benefit. For working spouses, it is the greater of the benefit earned from his or her earnings or 50% of the worker’s benefit.
- The Survivor Benefit: This is the benefit paid to the surviving spouse, which is paid at a rate equal to the greater of his or her own then-current benefit, or the deceased spouse’s then-current benefit.
The first and most obvious strategy for maximizing your Social Security benefit is to simply wait to reach age 70 before beginning to take benefits. By waiting until age 70 to receive benefits, your monthly payments may increase by 32%, not including any cost of living increases that may be added to this amount.
Benefit Maximization Strategies for Married Couples
Married couples have several claiming strategies that may be helpful in getting the most from Social Security, including:
File and Suspend: This strategy permits a spouse to claim his or her spousal benefit based on the working spouse’s earnings record, while the worker continues to accrue delayed retirement credits. Under File and Suspend, the higher-earning spouse files for benefits and then suspends them. This allows the lower-earning spouse to claim a spousal benefit, typically 50% of the higher-earning spouse’s benefit. The higher-earning spouse will accrue delayed retirement credits which, upon attainment of age 70, the couple can switch to their own benefit to receive the highest possible amount.
File a Restricted Application: A restricted application allows an individual, upon attaining full retirement age, to file only for a spousal benefit, based on the individual’s spouse’s work record. This allows the individual to accrue delayed retirement credits until age 70. Upon reaching age 70, the individual would then switch to his or her own benefit.
Combination of the Two: Married couples can combine the above strategies with one spouse filing and suspending a worker benefit, while the other spouse files a restricted application to receive the spousal benefit only. An individual cannot both file and suspend a restricted application, which is why the combination strategy must be coordinated between the spouses.
If you would like us to analyze your Social Security options, please contact our office at 229-247-1474.
Stacy Bush has practiced independent financial advising in the Valdosta area for 14 years. Growing up on a farm in Donalsonville, Georgia, he is keen to the financial needs of South Georgia and North Florida families. Stacy and his wife, Carla, live in Valdosta with their four children. You can submit questions about this article to askstacybush@lpl.com
