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."
More from Marketwatch.com:
MORE ON MSN MONEY
VIDEO ON MSN MONEY
Here we go again. I am not a conspiracy-theorist by nature, but there almost seems to be a concerted effort going on these days to try to convince people not to take their SS the first chance they get. Don't suppose they want us to die before we collect a dime, do you?
This article is just a BROAD generalization and each person is unique.
What if you are 62 and your doctor tells you that you would be dead in a year--- it would be
really stupid to wait.
What if you are jobless and need the money at age 62 ?
What if your family history shows that nobody except you lived past age 60 ?
Use your brain people--- not some fool talking in broad generalities.
I have heard and known of immigrants whom have came to the United States by their children and/or relatives petition and are at the age of Social Security Administration Benefits. If it be Regular Social Security entitlements or Disability with Medicare and/or Medicaid.
I see and witness it daily. How fair can this be if they take others entitlements whom worked and earned the Benefits.
It is like balancing a checkbook. If 10 people pute into the program and 10 people whom never worked a day in their lives here in the United States take eligible persons entitlements. the Bank Account does not balance out and a lot take the money back to their Citizensship Country while Socoal Security Direct Deposit it in their their acount.
The government is now referring to our Social Security checks as a Federal Benefit Payment. This isn't a benefit it's earned income! Not only did we all contribute to Social Security but our employers did too. It totaled 15% of our income before taxes.If you averaged $30K per year over your working life, that's close to $180,000 invested in Social Security. If you calculate the future value of your monthly investment in social security ($375/month, including both your and your employers contributions) at a meager 1% interest rate compounded monthly, after 40 years of working you'd have more than $1.3+ million dollars saved! This is your personal investment. Upon retirement, if you took out only 3% per year, you'd receive $39,318 per year, or $3,277 per month. That's almost three times more than today's average Social Security benefit of $1,230 per month, according to the Social Security Administration.
And your retirement fund would last more than 33 years (until you're 98 if you retire at age 65)! I can only imagine how much better most average-income people could live in retirement if our government had just invested our money in low-risk interest-earning accounts. Instead, the folks in Washington pulled off a bigger Ponzi scheme than Bernie Madoff ever did. They took our money and used it elsewhere. They forgot that it was OUR money they were taking. They didn't have a referendum to ask us if we wanted to lend the money to them. And they didn't pay interest on the debt they assumed And recently, they have told us that the money won't support us for very much longer. But is it our fault they misused our investments? And now, to add insult to injury, they're calling it a benefit, as if we never worked to earn every penny of it. Just because they borrowed the money, doesn't mean that our investments were a charity! We have earned our right to Social Security and Medicare. Demand that our legislators bring some sense into our government
Find a way to keep Social Security and Medicare going, for the sake of that 92% of our population who need it. Then call it what it is: Our Earned Retirement Income.
No mention of WEP or GPO or both reducing ones payments! No mention of taxation of benefits! No mention of a lot of issues that can determine and will determine ones elibibility and payment amounts! So many laws have been passed since its first implementation that it is no longer a "workers" earned right. For those of you not yet receiving---just wait. Lots of surprises are awaiting. Usually NOT beneficial ones! Good luck. You will need it.
There needed to be a lot more explanation of this line in the article:
"The total value of your stream of Social Security benefits -- the present value -- would be greater if you didn't claim at FRA or three years prior to FRA."
First, did you mean "FRA or ANY of the three years prior to FRA"?
Second, did you take into account actuarial tables re: longevity? (Hard to imagine you did, since you didn't qualify whether you meant male or female.)
Third, did you take into account the "time value of money", that the earlier payments are worth more both because of later inflation and because they could have earned income.
I guess I'd just like to see the math. Then I could know if you really know what you're talking about.
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.