Chances are that if you have worked most of your life and paid into the Social Security system, you are looking forward to receiving a monthly check sooner or later. Hypothetically speaking, if you were expecting a check for $2,100 per month but instead, could realize monthly payments of $2,300-$2,400, you would choose the greater. Why? Simple! More is better!
But as AARP reports17, there will be 8,000 people turning
65 every day for the next 18 years in the United States. Many are retiring and leaving tens of thousands of dollars in lifetime benefits on the table.
By employing legal and often obscure or misunderstood strategies, retirees can maximize their monthly and ultimately, lifetime benefits—a difference that can add up to over $100,000 for a couple.
While we could write an entire book on Social Security, we simply want people to recognize that it is one of their greatest investments and that there is much at stake relative to how and when they elect to receive it. We strongly advise that you consult with a professional advisor concerning this topic.
The choice of “how” to receive benefits is equally important as to “when” retirees are going to elect their Social Security benefits. There are multiple choices available to individuals, and hundreds to choose from for married couples and qualified domestic partners (see your state law).
The problem for many, though, is how to determine what strategy will yield them and their household the most money. What is best for one couple may not be right for another. Making your best choice starts with knowing what you don’t know.
There are many factors to consider when deciding what the most appropriate time and method is for claiming OASDI benefits. Some of the issues are easily considered such as: retirement goals, current health, family health history, retirement assets, needs and budget, and other factors affecting longevity.
Most important in assessing your decision to collect Social Security, is understanding at what point you can no longer live comfortably due to retirement, disability, or the death of a spouse.
Maximizing your lifetime benefits from Social Security provides the maximum payment for the length of time that you and your household need it.
You may want to consult with a financial advisor to request your personalized “Social Security Maximization Report” for your unique situation. This report incorporates you and your spouse’s (if applicable) earnings histories as reported on your Social Security Statement and is available at www.socialsecurity.gov/myaccount.
Here’s a quick selection of terms you will encounter when researching and dealing with Social Security:
The Old-Age, Survivors, and Disability Insurance (OASDI) Program, which for most of us means “Social Security,” is intended to provide monthly benefits to partially replace lost income due to retirement, death or disability.
Full Retirement Age (FRA), when a worker can receive an unreduced benefit, varies according to date of birth and generally ranges from age 65-67.
The Primary Insurance Amount (PIA), or monthly benefit, is tied solely to a person’s work record—the 35 highest earnings years are used to calculate benefits.
The Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) pertain to persons receiving non-covered (employed by employers who did not withhold Social Security taxes such as government agencies, state colleges, etc.) pensions. Those receiving this type of pension may (most likely will) have their PIA reduced. In the case of the GPO, spousal and survivor benefits will be reduced by ⅔ of the non-covered pension. In both cases of non-covered pensions, Social Security may adjust benefits for those entitled to them.
17“Baby Boomers Turning 65,” AARP, last accessed January 12, 2015. https://www.aarp.org/