Social Security Collection Strategy Overview

 The Strategies listed below are designed to help you maximize your retirement income by collecting Social Security Benefits at the optimal age.


Restricted Application


Postpone the Claim

Retirees that have spendable assets such as IRAs or savings may want to postpone claiming Social Security until a later age.  This can easily be done by structuring a Single Premium Immediate Annuity to fill the income gap between 62 and the later age.  By doing so the retiree gains a couple of distinct benefits:

1)  allows the retiree to collect almost 30% more in Social Security benefits at Full Retirement age compared to age 62 and by postponing each year past full retirement age, equates to about a 7% increase in benefits up to the maximum, at age 70.

2)  allows for a larger survivors benefit,(the surviving spouse continues with the larger social security benefit).

3)  allows for a potential income tax benefit in the future. (currently based on income and marital status anywhere from 0 to 85% of social security benefits are subject to Federal Income Tax.

Example of the increase in Social Security Benefits by postponing from age 62 - 67.


 File and Suspend Strategy   * The Bipartisan Budget Act of 2015 was signed November 2. This common filing strategies currently offered will no longer apply starting in 2016.

Currently: A filer who is at or past Full Retirement Age (FRA), can file for individual benefits, but suspend receiving them and allow a spouse or dependent to collect off of their record. 
Through April 30, 2016: Anyone 66 or older can still file and suspend to allow an eligible spouse or dependent to collect a benefit off their record under the old rules.
After April 30, 2016: “File and suspend” will no longer enable a spouse or dependent to collect benefits off of the filer’s record, unless the filer takes a benefit. For a spouse or dependent to collect a benefit, filers must collect their own benefit and forgo delayed retirement credits. If an individual suspends benefits, all spousal and dependent benefits will be suspended. 

 

Lump Sum Voluntary Reinstatement of Benefits

Currently: An individual who files and suspends can request that all suspended payments be paid in a single lump sum.
Through April 30, 2016: Individuals who will be at least age 66, and want to utilize this strategy, will need to file and suspend benefits.
Individuals who file and suspend benefits after April 30, 2016 will no longer be able to request a lump sum payment of all suspended benefits. 

 62/70 Strategy

Married couples who can’t afford postponing Social Security altogether can use a technique known as the “62/70 Strategy” to maximize benefits over the long term. With this system, the lower-earning spouse files for Social Security at age 62 and the higher earner delays until age 70. “No matter which spouse dies first, the surviving spouse will be able to keep the larger benefit.


 Collect and Accumulate/Save

Some retirees have felt it best to start collecting Social Security at the earliest age possible, even if the income is not needed.  In these cases Retirees can establish a tax deferred annuity to allow these funds to accumulate with interest.  This allows the retiree to build a reserve fund and still have the ability to spend the social security income if needed in the future.


Survivor Benefit Strategy

Social Security Survivor Benefits provide a unique planning opportunity.  A surviving spouse has the ability to claim this benefit as early as age 60 while allowing their own Social Security Benefit to continue to earn delayed retirement credits out to a maximum benefit at age 70.  This allows the surviving spouse the ability to get a potential pay raise in the future.


Divorced Spousal Benefits

If you are at least 62, have been divorced from a marriage that lasted at least 10 years, haven't remarried and not eligible for an equal or higher benefit.  You may be able to claim Social Security benefits based on your Ex's work record.  Your Ex has to be 62 or older and in most cases collecting benefits.