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How to Maximize Your Social Security Benefits

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If you’re like most Americans, your Social Security benefits will make up a significant chunk of your retirement income. You have several ways, especially if you are or were married, to make your monthly check as high as it can be. AARP’s Social Security Calculator is an easy way to see how different claiming strategies might affect your benefits. Check it out at www.aarp.org/socialsecuritybenefits. Here are some strategies to consider:

Delay


You can begin collecting Social Security at age 62, but your monthly benefits will be permanently reduced. It’s usually best to wait until full retirement age to claim unreduced benefits. But, if you can wait to claim until after your full retirement age, your benefits will grow 8% a year, up until you turn 70.

Who can do it?

Anyone eligible for Social Security retirement benefits can delay claiming them. If you’re in good health and expect a long life, it’s a great way to bolster your future income. And, by growing your benefits, you’re also increasing survivor benefits if you’re married and your spouse outlives you.

How does it work?

For each year you delay claiming your retirement benefits (up to age 70), your monthly check will go up by 8%.

Here’s an example:

Here’s what happens to the benefits of an individual who reaches full retirement age at 66 based on her claiming age:

 Age of Retirement    Monthly Benefits
 62  $750
 66  $1,000
 70  $1,320

File and Suspend


One way for married couples to grow their combined benefits is to take the “file and suspend” approach. When the first spouse files for benefits, it triggers the ability of the other to file for spousal benefits.

Who can do it?

Any married couple can use this strategy, but the biggest upside goes to couples in which one has significantly higher lifetime earnings. The person filing must be at least full retirement age.

How does it work?

The higher earning spouse files for benefits at full retirement age, then immediately suspends them. The lower earning spouse is now free to file for spousal benefits, as long as she is at least 62. This allows the lower earner to collect the higher spousal benefits, while the higher earner’s benefits grow. For each year the higher earner suspends his benefits, they will grow by 8% (up to age 70). This is a great way to maximize survivor benefits, too. If the higher earner dies first, the lower earner will be able to collect 100% of the higher earner’s benefit.

Here’s an example:

George reaches his full retirement age of 66. He files for his benefits, then immediately suspends them. His wife Bonnie files for spousal benefits at age 62. George’s benefit will grow by 8% for each year he holds off collecting, up to age 70.

Claim Now, Claim More Later


The “claim now, claim more later” approach is a great way to maximize lifetime benefits, but it doesn’t necessarily increase monthly benefits.

Who can do it?

This strategy is useful for two-earner couples in which each spouse qualifies for his or her own retired worker benefit. One spouse must be at least full retirement age to use this approach. It works best when the older spouse is the higher earner.

How does it work?

As the name of this approach suggests, you can claim some benefits now, and claim higher benefits later. You can do this by applying for spousal benefits instead of your own retired worker benefits when you reach full retirement age. Later, you can claim your own higher retirement benefits. Remember, they grow 8% a year up to age 70. In order for one spouse to claim spousal benefits, the other must first file for his or her own retirement benefits. Make sure when you apply that you restrict your application to spousal benefits and are not collecting your own retirement benefits.

Here’s an example:

Bob’s full retirement age is 66. His wife Kathy is 62. Kathy wants to begin her Social Security benefits at 62. Her monthly check will be reduced permanently by doing this. But since Bob waited until his full retirement age, he has options. With the “claim now, claim more later” strategy, Bob claims spousal benefits at age 66, allowing his own retirement benefit to grow until age 70. At that time, he files for his own benefits, which will be 32% higher than if he had filed for them at age 66. (This is because his benefit grew by 8% a year for four years.)

File and Suspend + Claim Now, Claim More Later


Now that you see how the “file and suspend” and “claim now, claim more later” approaches work, you can actually employ both strategies.

Who can do it?

Working couples who are close in age and who each qualify for Social Security benefits on their own work records can use this approach. Both must be at least full retirement age, though—it’s not available to workers who claim benefits early.

How does it work?

The older spouse claims her retirement benefits at full retirement age, and immediately suspends them. When the younger spouse turns full retirement age, he files for a spousal benefit only. When the older spouse turns 70, she can claim her retired worker benefit, which will have grown by 8% a year. When the younger spouse turns 70, he can convert his spousal benefit to his own retired worker benefit. It, too, will have grown by 8% a year.

Here’s an example:

Kim is 66 and her husband Philip is 65. Kim files for her Social Security benefits and immediately suspends them. Then, when Philip turns 66, he files for a spousal benefit. When Kim turns 70, she claims her benefits, which have grown by 32%. Then when Philip turns 70, he converts his spousal benefits to his own retired worker benefits, which have grown by 32%.

Divorced Singles


Various claiming strategies that are available to married couples may apply if your marriage ended in divorce.

Who can do it?

If you’re divorced, but your marriage lasted at least 10 years, you are eligible to receive spousal benefits based on your ex’s work record. The benefit doesn’t apply if you remarried, and you must be at least age 62.

How does it work?

In order to claim benefits based on your ex-spouse’s work record, your ex must be at least 62. It doesn’t generally matter if he or she has filed for benefits yet, or whether he or she has remarried. But if your ex hasn’t yet applied for benefits, you’ll need to wait two years after your divorce to file. There’s no waiting period if your ex has already applied for benefits. You can claim spousal benefits at age 62, but they will be permanently reduced. On the other hand, you can claim spousal benefits at your full retirement age, and allow your own benefit to grow 8% a year, up to age 70.

Here’s an example:

Karen and Rob divorced after 18 years of marriage. They are both 62, and Karen hasn’t remarried. She can claim spousal benefits now, but she’s decided to wait for four years. At 66, her full retirement age, Karen will collect spousal benefits against her ex-husband’s work record. At age 70, she’ll convert it to her own benefit, which will have grown by 32%.

Take Action!

Gather documents, including your Social Security card, marriage certificate and divorce agreement (if applicable). Contact the Social Security Administration at 1-800-772-1213 or www.ssa.gov to determine what benefits you are eligible for on your own record and on your spouse’s (or ex-spouse’s) record. Use AARP’s Social Security Calculator to help you look at the numbers: www. aarp.org/socialsecuritybenefits. Make a plan for your retirement. Be specific and set realistic goals to help make retirement attainable. Go to www.aarp.org/readyforretirement for resources to help you plan, budget and save.

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