Proactive Social Security Strategies

Proactive Social Security Strategies

| December 01, 2019

We’re going to look at 3 Social Security strategies that may make you some extra money.

One strategy is for those that filed early and now regret that decision. When you reach full retirement age, which for most people is age 66, you are allowed to suspend your benefit and get delayed credits of 8% a year until age 70.

For example, say Jane filed early for her Social Security benefit at age 62. Because she filed early, she only gets 75% of her full benefit. After a year, Jane regrets filing early and wishes she would have waited. When she reaches full retirement age, she can suspend her monthly benefit and start getting delayed credits of 8% a year up to age 70, plus a cost of living increase. If Jane lives out her life expectancy and gets the average social Security cost of living adjustment, the overall benefits she’ll receive over her lifetime will be more than her original choice.

A second strategy is for a married couple where at least one of them is born before January 2nd, of 1954. That person can still file a restricted application for spousal benefits. A restricted application is where this spouse can get an amount equal to 50% of the other spouse’s Social Security benefit, while their own Social Security benefit grows at 8% per year until they’re 70. To do this, they must be at their full retirement age, which for most people old enough to qualify for this strategy is now age 66.

However, the other spouse that they’re basing this 50% benefit on does not have to be at full retirement age.  Normally, they can be as young as 62, and they must have filed and be taking their own benefit before you can take 50% of it.

Also what’s interesting is if this spouse takes their Social Security at 62 for example, they get a reduced benefit, but the spouse taking ½ of it gets 50% of the full benefit, not the reduced benefit.

This means your spouse cannot file & suspend their benefit like it used to be, while you collect 50% of their Social Security. We call this current strategy file and take - as opposed to file and suspend. To recap, only at your full retirement age, can you file to take 50% of your spouse’s Social Security benefit while you let your own continue to grow until age 70, and they must already be taking their Social Security benefit.

The third strategy is to delay filing until you reach age 70. This can increase your benefit to 132% of what you would have gotten at full retirement age plus you get cost of living increases. This can provide you with significant extra income, especially if you live out your life expectancy. If you’re married, you can pass on this higher income at age 70 as a survivorship benefit to your surviving spouse if you die prematurely.

Just remember, these are strategies that you need to take action on, they don’t just happen, if you need help with this, please contact us.



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. 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.