When it comes to retirement, it’s always nice to have options. Only 30% of Americans can count on a traditional defined benefit pension, according to the Employment Benefit Research Institute, so it’s important to plan for retirement early and to supplement that with Social Security benefits. Social security has been a topic of conversation for citizens and politicians alike over the past few years. While the future of Social Security might be unclear, for those of us who are eligible to collect Social Security benefits now or who are close to retirement age, the nuances of the Social Security system can be difficult to navigate. A great article in USA Today, “Money Watch: Maximizing Social Security Benefits,” might help you better understand the process.
- Unfortunately the economic conditions have caused many to reconsider their early retirement options. You can continue working with no impact to your Social Security benefits due to the fact that there is no earnings limit after you’ve reached age 66. However, you will not be taking advantage of any benefit increases if you file for Social Security at age 66 when you are still working and don’t need the benefits to live on. For each month that you delay filing for your benefits beyond age 66, your benefit will increase by 2/3 of 1%.
- Delay for a year, and your benefit will increase by 8%. This is in addition to the cost-of-living adjustments (COLAs) that are applied to Social Security most years. You can delay this filing to as late as age 70, at which point you would have increased your benefit by 32%. As you delay this benefit, you’re not only increasing your own benefit when you do file, but if you die first, your wife will also receive that increased benefit amount after your passing as a Survivor’s Benefit.
- Your spouse will be able gain the increased benefit amount as a Survivors Benefit after you pass away. “As you delay this benefit, you’re not only increasing your own benefit when you do file, but if you die first, your wife will also receive that increased benefit amount after your passing as a Survivor’s Benefit,” says James Blankenship, NAPFA-Registered Financial Advisor. For instance, “If your wife files the Spousal Benefit at age 65, she may only receive approximately 46.25% of your age 66 benefit. But if she waits until she reaches age 66, she would receive the full 50% Spousal Benefit.” Married couples seem to be benefiting the most from Social Security.
