3. Start-Stop-Start—If you elected early (age 62), and later decide to defer your Social Security income benefits, you can suspend your benefits as early as age 66. This will allow your benefits to increase by 8 percent per year (known as delayed retirement credits) to age 70, resulting in a 32 percent increase.
4. Increase Your Benefits While Receiving Your Benefits—Your benefits are based on your highest 35 years of averaged indexed monthly earnings. If you continue to work while receiving benefits, and your earnings are higher than any of the previous 35 years of indexed earnings, your benefits will be re-calculated to reflect your higher current earnings.
5. File and Suspend—Once you reach full retirement age, you can elect to “file and suspend” your benefits, allowing your benefits to grow by 8 percent per year, plus cost of living adjustments, to age 70. Since you have technically filed for benefits, although not receiving them, your spouse will be eligible to file for spousal benefits at her full retirement age.
6. File and Restrict—If your spouse has filed for his or her benefits (and you have reached full retirement age), you could restrict your benefit to a spousal benefit and collect 50 percent of the spouse’s benefit amount. Then you could defer taking your own benefit until age 70 in order to earn delayed retirement credits plus cost of living adjustments on your benefits. At age 70, you would switch to your now much-higher benefits.
7. Spousal Benefits—If you get married, you are eligible for spousal benefits once you have been married for at least one year. At full retirement age, spousal benefits are equal to 50 percent of your spouse’s full retirement age benefit.
8. Survivor Benefits—Once you have been married for at least nine months, you will be eligible for survivor benefits. Once you and your spouse reach full retirement age, survivor benefits will be 100 percent of the deceased spouse’s benefit amount, including any delayed retirement credits. Survivor benefits are available as early as age 60 (or 50 if you are disabled) at a reduced amount.
9. Divorced Spouse Benefits—If you were married for 10 years or longer, divorced for at least two years, not remarried, and you and your ex-spouse are at least age 62, you will be eligible for ex-spousal benefits, which are similar to benefits you would have received if you were still married.
10. Divorced Spouse Remarries—If you are divorced and then remarry, you will no longer be eligible for the ex-spouse benefits. However, if you remarry after age 60 and your ex-spouse is deceased, you are eligible for ex-spousal survivor benefits, even if remarried (assuming the criteria noted in No. 9 have also been met).
The rules governing Social Security income can be very complex. You must take the time to consider the options so that you can maximize not only your benefit but also your spouse or survivors, if needed.
Failing to properly plan Social Security elections can be a huge mistake. If you or a loved one is approaching age 62, it is well worth the time to consider the options that are available to ensure the best choice is made.
Your local CPA can help you understand your Social Security financial issues. Be sure to contact him or her with your questions and concerns. To find a CPA by location or area of expertise, visit www.ineedacpa.org.
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