True or False: Test Yourself on Social Security Claiming Strategies

Full retirement benefits, also referred to as the primary insurance amount, are payable in full once you have reached your full retirement age. Your full retirement age depends on the year in which you were born. For those born between 1943 and 1954, full retirement age is set at 66. For those bo... Read more ˅

Full retirement benefits, also referred to as the primary insurance amount, are payable in full once you have reached your full retirement age. Your full retirement age depends on the year in which you were born. For those born between 1943 and 1954, full retirement age is set at 66. For those born between 1955 and 1960, full retirement age gradually increases by two months for each year, up to age 67 for anyone born in 1960 or later.

If you claim before your full retirement age, your retirement benefits will be reduced by 5/9 of 1% for the first 36 months claimed early plus 5/12 of 1% for each of the next 24 months claimed early. For instance, if your primary insurance amount is $2,000 a month at full retirement age of 67 and you collect benefits at age 62, your benefits would be reduced by 30% [(5/9 x 1% x 36) + (5/12 x 1% x 24) = 30%], down to $1,400 (70% of $2,000).

A worker’s Social Security retirement benefits receive delayed-retirement credits, an increase in your monthly Social Security payments, up until age 70. After age 70, you do not receive any more delayed credits to increase your benefits, so it doesn’t pay to wait past age 70. Spousal benefit... Read more ˅

A worker’s Social Security retirement benefits receive delayed-retirement credits, an increase in your monthly Social Security payments, up until age 70. After age 70, you do not receive any more delayed credits to increase your benefits, so it doesn’t pay to wait past age 70. Spousal benefits receive no delayed credits, so there is no advantage to deferring past full retirement age.

Benefits for widows and widowers can be claimed as early as age 60, however, they will be reduced for claiming before full retirement age. Additionally, if you are still working, benefits could be further reduced because of the earnings test, which could cause a forced suspension of benefits unti... Read more ˅

Benefits for widows and widowers can be claimed as early as age 60, however, they will be reduced for claiming before full retirement age. Additionally, if you are still working, benefits could be further reduced because of the earnings test, which could cause a forced suspension of benefits until full retirement age. For 2018, the exemption amount for earnings is $17,040, meaning that people who haven’t reached full retirement age yet can only earn up to that amount before benefits begin to be withheld.

A 66-year-old can claim a widow’s benefit and switch over at any time after age 62 to her own retirement benefit as long as the retirement benefit is more than the widow’s benefit. In this claiming scenario, the 66-year-old could claim the $1,800-a-month survivor benefit today and get that fo... Read more ˅

A 66-year-old can claim a widow’s benefit and switch over at any time after age 62 to her own retirement benefit as long as the retirement benefit is more than the widow’s benefit. In this claiming scenario, the 66-year-old could claim the $1,800-a-month survivor benefit today and get that for four years. During that time, she could allow her $2,000-a-month worker benefit to grow until age 70 at 8% a year, resulting in a 32% higher benefit of $2,640 a month for life.

Part of the reasoning in this strategy is based on the fact that while worker benefits can grow by waiting to claim, thanks to earning delayed retirement credits, survivor benefits don’t grow past your full retirement age, except for cost-of-living adjustments.

So, claiming $1,800 for four years and then $2,640 at 70 for life is likely a much better claiming strategy than to just have $2,000 a month for life, assuming she lives at least to an average life expectancy for a woman who is currently age 66.

If you claim your Social Security retirement benefit, this could trigger eligibility for other benefits such as spousal benefits, benefits for unmarried children under 18, a spouse of any age caring for a child under age 16, and some other dependent benefits.

If you are divorced, you might be eligible for benefits on your own work history or your ex-spouse’s work history. However, you cannot be remarried and collect spousal benefits off an ex-spouse. To collect spousal benefits off your ex-spouse, you must have been married for at least 10 years, be... Read more ˅

If you are divorced, you might be eligible for benefits on your own work history or your ex-spouse’s work history. However, you cannot be remarried and collect spousal benefits off an ex-spouse. To collect spousal benefits off your ex-spouse, you must have been married for at least 10 years, be at least age 62 and be unmarried. In addition, your spouse must either:

• already be claiming their own Social Security benefits — in which case you can start claiming a benefit based on their work record right away, no matter how recently you divorced.
• or, if they aren’t already collecting their benefits yet, they must at least qualify to receive them — in which case you must have been divorced at least two years to be eligible.

You can also be eligible for survivor benefits from an ex-spouse, but the rules are slightly different.

By deferring the larger of the two benefits, the couple maximizes the survivor benefit. The way that Social Security works is that when one spouse dies, only the larger of the two benefits will continue to be paid. If the lower earner is the surviving spouse, she can receive up to 100% of what th... Read more ˅

By deferring the larger of the two benefits, the couple maximizes the survivor benefit. The way that Social Security works is that when one spouse dies, only the larger of the two benefits will continue to be paid. If the lower earner is the surviving spouse, she can receive up to 100% of what the higher earner was receiving or was eligible to receive at the time of his death. If the higher earner lives longest, he’ll keep receiving that higher benefit.

So, by deferring the larger of the two benefits, they are maximizing the biggest benefit for the longer of their joint lives.

Benefits collected before full retirement age are subject to a rule called the earnings test, which can cause benefits to be reduced while working. However, the earnings test applies for those who claim benefits before reaching their full retirement age or in the year in which they obtai... Read more ˅

Benefits collected before full retirement age are subject to a rule called the earnings test, which can cause benefits to be reduced while working. However, the earnings test applies for those who claim benefits before reaching their full retirement age or in the year in which they obtain full retirement age but before they hit full retirement age.

It is also important to note that these benefits are not completely lost, but only withheld. Once you reach your full retirement age, your benefit amount would be recalculated to include any benefits withheld while subject to the earnings test.

Social Security withholds $1 for every $2 of earnings in excess of the threshold of $17,040 in 2018. In the year in which you obtain full retirement age the threshold moves to $45,360 in 2018 and the withholding moves to $1 for every $3 of earnings over the threshold.

See the Social Security website for more details.

Many people do not know you can change your mind and withdraw your Social Security application. However, this is a complex rule. First, you need to change your mind and withdraw your application within 12 months of applying. After that you can no longer change your mind and withdraw your applicat... Read more ˅

Many people do not know you can change your mind and withdraw your Social Security application. However, this is a complex rule. First, you need to change your mind and withdraw your application within 12 months of applying. After that you can no longer change your mind and withdraw your application. You are limited to one lifetime withdrawal. You also need to repay any benefits that were paid to you or your family based on your retirement application.

The advantage of repaying benefits and withdrawing your application is that your benefits will not be reduced for early claiming, meaning when you do claim later on your monthly benefits will be higher. If more than a year has passed, another option is that you can always voluntarily suspend your benefits once you reach full retirement age. However, in this case you do not get to undo your early claim, nor do you repay benefits, but you still get the 8% increase in benefits per year you defer after voluntarily suspending until age 70.

You need to be collecting your own benefits to trigger spousal benefits. This can be a big issue for spouses with large age differences when the older spouse expects to only have spousal benefits. Even if you reach your own full retirement age, you are not eligible for spousal benefits off of you... Read more ˅

You need to be collecting your own benefits to trigger spousal benefits. This can be a big issue for spouses with large age differences when the older spouse expects to only have spousal benefits. Even if you reach your own full retirement age, you are not eligible for spousal benefits off of your spouse unless he has claimed his own benefits.

In the past, there was a wrinkle to this situation where people could file for benefits at FRA and immediately suspend to trigger spousal benefits and still allow their own benefit to receive delayed-retirement credits, but that option was removed in 2015 legislation, which took effect in 2016. Today, typically in order for someone to qualify for spousal benefits, their spouse needs to have claimed and be collecting benefits.