Social Security: Maximizing Your Social Security Benefits

Most understand that waiting to claim Social Security benefits can result in higher monthly payments. However, many don’t understand that there are other ways to maximize their benefits, some of which depend on their marital status. Understanding the strategies for maximizing your Social Security retirement income benefits should be prefaced with a review of the three basic forms of retirement benefits:
  1. The Worker Benefit: This is the benefit you receive based on your own personal earnings history, and for which you become eligible after 40 quarters of work.
  2. The Spousal Benefit: This is the benefit paid to your spouse. For non-working spouses, this is 50% of the working spouse’s benefit. For working spouses, it is the greater of the benefit earned from his or her earnings or 50% of the worker’s benefit.
  3. The Survivor Benefit: This is the benefit paid to the surviving spouse, which is paid at a rate equal to the greater of his or her own then-current benefit, or the deceased spouse’s then-current benefit.

The first and most obvious strategy for maximizing your Social Security benefit is to simply wait to reach age 70 before beginning to take benefits. By waiting until age 70 to receive benefits, your monthly payments may increase by 32%, not including any cost of living increases that may be added to this amount.

Benefit Maximization Strategies
for Married Couples

Married couples have several claiming strategies that may be helpful in getting the most from Social Security, including:

File and Suspend: This strategy permits a spouse to claim his or her spousal benefit based on the working spouse’s earnings record, while the worker continues to accrue delayed retirement credits. Under File and Suspend, the higher-earning spouse files for benefits and then suspends them. This allows the lower-earning spouse to claim a spousal benefit, typically 50% of the higher-earning spouse’s benefit. The higher-earning spouse will accrue delayed retirement credits which, upon attainment of age 70, the couple can switch to their own benefit to receive the highest possible amount.¹

File a Restricted Application: A restricted application allows an individual, upon attaining full retirement age, to file only for a spousal benefit, based on the individual’s spouse’s work record. This allows the individual to accrue delayed retirement credits until age 70. Upon reaching age 70, the individual would then switch to his or her own benefit.²

Combination of the Two: Married couples can combine the above strategies with one spouse filing and suspending a worker benefit, while the other spouse files a restricted application to receive the spousal benefit only.

An individual cannot both file and suspend a restricted application, which is why the combination strategy must be coordinated between the spouses.

Benefit Maximization Strategies
for Divorced Spouses

For divorced spouses, you can file a restricted application for a spousal benefit once you reach full retirement age, as long as your former spouse is 62 or older at the time of your application. You can then delay receiving benefits under your own work record, allowing your delayed retirement credits to build. At age 70, you can switch over to your worker benefit, assuming it is higher than the spousal benefit you’ve been receiving.

Benefit Maximization Strategies
for Widows and Widowers

Remember, there is no spousal benefit for a widow/widower, but he or she does qualify for a survivor benefit that is equal to 100% of the deceased spouse’s benefit (versus the 50% spousal benefit if the working spouse is still alive). This survivor benefit is available at age 60.³

If you are widowed and also have worked for 40 quarters, you will have a worker benefit and a survivor benefit. This presents you with several choices. One choice is to file for the benefit that provides you the greatest monthly benefit amount.

Another choice may be to start your worker benefit at age 62 and then switch to the survivor benefit once you reach full retirement age. This option is advantageous in instances where the widowed spouse did not accumulate the same level of benefits as the deceased spouse. Choosing this option allows the surviving spouse to take the higher survivor benefit amount. Because there are no delayed retirement credits earned on survivor benefits, there is no advantage to waiting past full retirement age to apply for survivor benefits.

A final choice is to consider starting the survivor benefit at age 60 and then switching to your own worker benefit at age 70. This strategy allows you to begin receiving income based on the survivor benefit as early as possible and provide you time to build up the maximum worker benefit.

Considerations for Same-Sex Couples

If you were legally married in a state that recognizes same-sex marriage, your partner may be eligible to receive spousal benefits. If your state does not recognize same-sex marriage, your partner may still be eligible, but you will need to apply for benefits to get a determination.

As you can see, there are several ways you can potentially maximize your Social Security benefits. These strategies can help you maximize your benefits beyond just waiting until the age of 70 to start receiving benefits.

  1. Social Security Administration, September 2014
  2. Social Security Administration, September 2014
  3. Social Security Administration, September 2014

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2015 FMG Suite.

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