Start with this short introductory video
Why it’s important
Finding the best Social Security strategies can be a daunting task. Because of that, too many people file for the benefits early.
That can be a costly mistake. Claiming early reduces your benefit. How much depends on your age. Someone whose full retirement age (FRA) is age 66 claiming at age 62 only gets 75% of the benefit.
Let’s say your benefit at age 66 is $2,000. Claiming at age 62 reduces your benefit to $1,500. That’s means instead of $24,000 a year in income, you only get $18,000. That $6,000 loss adds up to $72,000 in lost income. In retirement, what could you do with an extra $500 a month in income? For many, it makes a huge difference. This assumes zero percent inflation. Social Security uses 2.6% inflation in their calculations. Think about the impact when that’s added!
If your married and you claim early, what you may not know is that you’re also reducing your spouse’s survivor benefit. When someone claims their benefit determines the survivor benefit.
I hear many reasons for why people claim early. One of the most common these days is, “I’m going to get it before Social Security runs out of money.” (for more on that read a recent article from my Money With a Purpose blog, Is Social Security Going Broke). Another one I often hear is, “I’m not going to live past (insert age), so I’m going to get it while I can.
Claiming early may be the right thing to do. My advice – before you decide, explore all of the options.
(For more read, The Top 4 Reasons to Delay Claiming Social Security Benefits)
Social Security after the Bipartisan Budget Act
The Bipartisan Budget Act of 2015 instituted major changes to some of the most popular claiming strategies as follows:
- Retirees who have already filed and suspended or filed claims for restricted spousal benefits are grandfathered in and will not be affected.
- Retirees turned age sixty-two by the end of 2015 may still be able to file restricted claims for spousal benefits if their own spouse has filed for benefits.
- The popular file and suspend strategy is no longer available.
- Retirees who are too young to claim benefits by May 1, 2016, currently cannot use these strategies.
What you should know
The 2015 budget act took away many good claiming strategies. There are still very effective ways to maximize Social Security income.
Before you make any decisions about when to claim benefits, it’s important to do a careful analysis of your options. I’ve seen these bad decisions cost families literally hundreds of thousands of dollars in lost benefits.
Leamnson Capital uses sophisticated software that will help you “do the math” to determine the best-fit-claiming strategy for your situation.
As you saw in the video coordinating the claiming strategy with your overall retirement income planning is important, It’s the best way to maximizing after-tax retirement income. That’s why we include Social Security claiming analysis as part of after-tax comprehensive planning services.
If you have questions or would like to further discuss your situation, go to my online calendar to schedule a short, no-obligation phone chat. Even if you don’t become a client, this is too important to ignore. Schedule your call to get your questions answered.