12/5/2012 6:15 PM ET|
A bigger Social Security check?
File and suspend
If you are at your full retirement age, you can continue to work and suspend your benefit so your current spouse can collect a spouse's benefit and you can earn delayed retirement credits, said Clements. "The voluntary suspension is only for the months beginning after the month the request is made. A current spouse cannot claim a benefit on the worker's record until the worker has applied."
Andy Landis, of Seattle, the owner of Thinking Retirement and the author of "Social Security: The Inside Story, 2012 Edition," poses this question: Did you know you could apply for Social Security at 62 and draw four years of Social Security payments, then suspend your payments at age 66?
"A handful of people know you can apply at 66 and immediately suspend your payments, which allows your spouse to file on your record," he said. "But you can also suspend payments already in force, any time from age 66 to 70. Why? The win is that while suspended, your eventual payments are growing in the background at 8% per year."
Claim spouse's benefit now and worker's benefit later
It's not as quirky as other tactics, but it's well worth mentioning for those who might be unfamiliar with this one: If you are married and have attained full retirement age, you can claim a spouse's benefit and then switch to a benefit based on your own work record later, according to Clements. "This allows a person to collect a spouse's benefit now while earning DRCs up to age 70 on their own work record," she said. "People that are younger than FRA aren't allowed to do this."
She gave this example: A husband and wife are both at FRA, age 66, and have covered Social Security earnings. The husband's monthly benefit is $1,400, and the wife's monthly benefit is $1,000. The husband files for benefits. The wife can now claim a spouse's benefit of $700 (50% of her husband's benefit) and continue working and contributing toward her own Social Security benefit. At age 70 she files for her own retirement benefit that has earned DRCs and is $1,320 a month. Her spouse's benefit stops and her higher retirement benefit amount starts.
If parents have been receiving one-half support from a child for the 12 months prior to his or her retirement, they can receive a benefit on the child's account at age 62, according to Heywood. "Not too many of these (are) around anymore because most people have worked or are covered as a spouse for a higher benefit," Heywood said.
Though it happens rarely in reality, a variation on this quirk is this: A parent can collect on a child's work record if the child is deceased, said Epstein. "The parent would have to show they were dependent on the child," she said. "Once the dependent parent reaches the age of 62, he or she can apply for benefits on the child's work record if the child is deceased."
If you are already receiving Social Security retirement benefits, Clements said you can start your benefit over within 12 months of the first month of entitlement and limited to one withdrawal. "You can file a Request for Withdrawal of Application, or Social Security Form 521, and your benefits stop immediately when you file," she said. "The SSA will tell you how much you are required to pay back, including any family members that received benefits based on your work record. After your repayment, you would reapply for benefits. The advantages of doing this are your monthly benefit amount will be higher based on your current age, and the SSA does not charge interest on the repayment."
Gimmicks undermine Social Security
For the record, there are those who aren't so fond of claiming strategies that are gimmicks or abuses of the system. "I was always on the lookout for unique claiming strategies, in part because I'm fascinated by the financial aspect of claiming strategies, but also so I could suggest reforms if there was a strategy that seemed unfair and more of an abuse or gimmick," said Jason Fichtner, who is now a senior research fellow at the Mercatus Center at George Mason University and was formerly acting deputy commissioner at the Social Security Administration.
Fichtner noted, for instance, that the SSA limited the ability to get an interest-free loan from the government via the so-called "do-over" strategy a few years ago, when he worked for the government.
What's more, Fichtner was quick to say that Social Security is intended to be "insurance," which is why it's called the "Old-Age and Survivors Insurance" program. "It was never intended to be the sole means for people to live off of in retirement," he said. "It's insurance against the possibility that you'll run out of saving by living too long."
Fichtner said there's a personal responsibility aspect to the program where individuals are supposed to have some personal saving. "Gimmicks that treat Social Security as a lottery where big bucks can be won not only negatively affect the solvency of the program but also undermine the societal support for Social Security."
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