An important question for many individuals is when to begin taking Social Security. The answer will vary depending on each client’s situation.
A variety of considerations must come into play when deciding whether or not to take a lower benefit sooner or a higher benefit later. Some of these considerations include:
Health – Clients in poor health and/or unable to work might be well advised to take benefits early to help meet current living expenses and/or medical costs.
Life Expectancy – For those individuals in good health with a long life expectancy, based on family history, it may make sense to delay taking Social Security to maximize the benefits later in life.
Career Longevity – For those who are able and willing to continue working beyond age 62 and whose earnings will allow them to sustain their lifestyle, waiting until full retirement age to receive benefits probably makes sense.
Family Situation – For married couples, how and when one spouse decides to take Social Security benefits can affect the other spouse’s benefits. In general, spouses are eligible to receive the GREATER of their own Social Security benefits or one-half of their spouse’s benefit.
Keying in on family situations, there are also a number of strategies that are seldom discussed but should be considered when optimizing your decision – here are some little known strategies married couples can use:
File and suspend—A higher earning spouse applying for benefits at full retirement age has the option to apply for benefits, but suspend the receipt of those benefits. This would enable the lower-earning spouse to receive a spousal benefit while the higher earning spouse receives delayed retirement credits – resulting in a much larger benefit for the higher earning spouse at age 70.
Spousal optimization—If both spouses have been employed, the spouse who is eligible for the lower benefit could choose to receive benefits at age 62, while the higher-earning spouse delays taking benefits until later. When the spouse with the larger benefit dies, the surviving spouse would receive the higher survivor benefit.
Spousal switch—If both spouses have been employed, the lower earning spouse can apply for his or her own benefit. The higher wage earner, who has attained his or her full retirement age, can claim a spouse’s benefit – 50 percent of the lower wage-earner’s benefit – delaying receipt of his or her own worker’s benefit to earn delayed retirement credits. At a later date, the higher wage earner can switch to his or her own worker’s benefit, which is now much larger as it includes the delayed retirement credits.
If you would like to learn more about these strategies and Social Security, please join us for an informal presentation. Here are the details:
September 18, 2012 at 5:30 p.m. Madison Office, 455 S Junction Road
September 19, 2012 at 11:30 a.m. Verona Office, 108 N Main Street
Limited seating available. Please RSVP to Kristen Corcoran at 608-849-2775