Social Security Blunders
Social Security Corner
Common Social Security Blunders
Social security strategies can be met with confusion. Most people understand the basic concept; if you wait, you get more. Waiting doesn't always mean you will be better off. Take a look at this video where we detail some of the common oversights.
1) Overstating the risk of dying young
While some need to take the money at 62, others have a fear of dying before there time. There is a 50% chance that a 65 yr old today will live to 85.
2) Taking A Spousal Benefit Before FRA (66)
We get a lot of people asking if they can take their social security and their spousal as well. If you start before the age of your full retirement, you can get more than what you are supposed to on your own benefit if your husband has more than half of his benefit and is atleast 66 (excess spousal). If you take the spousal benefit, you are not taking a spousal only benefit which allows your benefit to earned delayed credits.
3) Oversight of survivor benefits
A married couple has to think about the double effect of filing for a reduced benefit. If the husband dies before the wife she will be stuck on that reduced benefit as well.
4) Singles Can File & Suspend Too
With all of the benefits for spouse's, divorced spouses, surviving spouses, singles can feel kinda left out. If a single person is going to wait to file until 70, they should still file and suspend there benefits. If they learn of a terminal illness, or owe money to the mob they can ask for a redo and get a check for their benefits they missed out on since FRA (66). If they live longer they will be stuck on the PIA (monthly check) at 66 vs the higher PIA at 77, however.
5) Can I remarry after 60?
For a divorcee whose ex-spouse has a higher amount than a current betrothed lover, they will not be able to file on the ex-spouse benefit if they remarry at any age. For a surviving spouse, they may remarry after 60 and choose to take a survivor's benefit or the future spouse's benefit. So in a nutshell, a divorcee will lose out if she marries after age 60, but the surviving spouse will not lose out if she remarries after 60.
7) Draining Reserves For An 8% bump?
There is a huge difference in SS benefits at age 62 vs 70. You could be looking at an 80% higher monthly payment. In order to get that bump you may need to drain down your capital (like an old 401k). Since no investments today (that I know of) can guarantee an 8% return, it could make sense to get that increase. There is one caveat; beneficiaries other than a spouse. If you were to pass away after having drained all or most of your capital you may not have much to leave to your children.
6) When Can I Start & Stop?
If you file for benefits at age 62, you can withdraw your application and pay back your benefits within the first year. If you decide after age 62 you can stop your benefits at FRA (66) and let your benefits earn an 8% bump each year until age 70.
Still Can't Choose?
Finding your breakeven point, optimal filing strategy and comparing your options can be easy. If you bring in your social security statement, we can prepare a customized analysis to help you make a decision based on your options. We would be glad to help. Simply call or send us a message.