Ways to Maximize Your Social Security Benefits
Most people know that if they file for Social Security benefits early, they will receive less than if they wait a few more years. However, it’s worthwhile to review the rules.
If you can hold out to file until you reach full retirement age, it will be the single biggest thing you can do to maximize your Social Security benefits.
Still, you may not understand what the full retirement age is under government rules, or how much money you can receive if you wait just a little longer.
Tiered Retirement Ages
The traditional “retirement age” of 65 only applies to those born before 1943. For those born between 1943 and 1960, the age is set at 66. For those born after 1960, it’s set at 67. It is important to understand that filing for benefits when you’re first eligible at age 62 can cut the benefits you receive by about 25 percent!
However, by waiting until you’re 70 years old to file for benefits; you can increase the amount you receive by eight percentage points for every year you delay.
For example, if an individual currently earns $100,000 and she decides to file for Social Security early at age 62, she will receive about $1,600 per month. If she holds off until her full retirement age, she’ll get $2,400 per month. But if she can put off filing for benefits until age 70, she’ll get $3,000 per month.
Non-Working Spouses Can Get Up to 50%
If you have a spouse who has little or no work history (typically a housewife), then your non-working spouse usually has to wait for you to file for Social Security benefits before he or she can receive spousal benefits.
However, there’s a great workaround to this rule called the file-and-suspend method.
As long as the higher earning spouse has reached retirement age, he can file for benefits and then suspend receiving them while continuing to work until age 70. This allows his non-working spouse to receive spousal benefits – up to 50 percent of what his benefits will be. This is a good tactic because it allows the working spouse’s benefits to continue to grow and it doesn’t affect his benefits when he chooses to receive them.
For dual-income families, this strategy can still payoff. If both spouses earn about the same income and both are at retirement age, then one can collect half of the other’s benefits using the file-and-suspend method while delaying collecting his own benefits until they’re worth more later.
To qualify for spousal benefits, couples must have been married for at least 10 years. A spouse can receive either the full benefits he qualified for on his own, or half his spouse’s benefit – whichever is greater.
Divorce Doesn’t Necessarily Negate Benefits
If you were married for over 10 years and have been divorced for at least two years, you are entitled to receive spousal benefits. This does not impact your ex-spouse’s benefits.
The only stipulation is that you can’t have married someone else. This is one reason why some older divorcees choose not to remarry. A second marriage for a non-working spouse can mean losing benefits from the first marriage.