Social Security Planning

As we all know - part of working is paying taxes. Part of these taxes goes toward Social Security.  The Social Security Act is a long and complex animal. For the purpose of this post we need to know the basics: you social security taxes are for retirement and disability (disability discussion is for another day on another blog).

These Social Security benefits first become available at the age of 62 - most of us know this; but what a lot of people don't know: at age 62 you're taking you benefits at a 25% discount for the rest of your life!

You Are Leaving Money On The Table!

Some people need these benefits as soon as they become available but, if you can wait, you can really add to the amount of money you're able to collect based on the work you've done. 

Full retirement age, or the age at which you can receive 100% of your Social Security benefit, is currently 66, but increases to 67, depending on the year you were born. As stated above: A person with a full retirement age of 66 who claims Social Security at 62 receives 75% of the amount they'd receive at his or her full retirement age. But, if a person waits until age 70 to claim Social Security, they will receive 32% more than he or she would receive at full retirement age

Did You Know You Can Collect Social Security Benefits From Your Current Ex-Spouse?

Social Security has spousal and divorced spousal benefits as well as widow(er) and divorced widow(er) benefits. Even if you have never worked under Social Security, you may be able to get spouse's retirement benefits if you are at least 62 years of age and your spouse is receiving retirement or disability benefits. You can also qualify for Medicare at age 65.

If you are divorced, but your marriage lasted 10 years or longer, you can receive benefits on your ex-spouse's record (even if he or she has remarried) if: 

  • You are unmarried
  • You are age 62 or older
  • Your ex-spouse is entitled to Social Security retirement or disability benefits 

A widow or widower can start to receive benefits at age 60 or wait and receive full benefits at 66 or 67 depending on birth year. However, if the widow(er) is over 50 and disabled within 7 years of the worker's death, they can receive full benefits. 

Maximizing These Benefits

Social Security recently closed a well-known loophole. The "file and suspend." Since this loophole is closed - It will not be discussed in this post. However, the spousal benefits remain to be the best way for a married couple to maximize their Social Security monthly benefit. The "strategy" comes from determining when to file for both the main and spousal benefits, but also to see if there are other benefits that you or your spouse might have available to them. As mentioned above you can collect the benefits of an ex-spouse, and in certain situations, this applies even if you're remarried. 

Mother (Father) Benefits

If you care the deceased's child who is under age 16 or disabled and entitled to child's insurance benefits (for a surviving divorced mother or father the child must be their natural or legally adopted child) -you could be entitled to benefits. 

Even Children Can Get Benefits

Your unmarried children who are under 18 (up to age 19 if attending elementary or secondary school full time) can be eligible to receive Social Security benefits when you die. And your child can get benefits at any age if they were disabled before age 22 and remain disabled.