6/18/2012 2:43 PM ET|
7 Social Security sins
You want to maximize your benefits, of course, but how do you do that? First, you avoid -- if you can -- some costly missteps.
Since the first payment was made in January 1937, Social Security has provided a safety net and source of reliable income for retired workers, their spouses and dependents. But getting the most from your Social Security benefits is far from simple.
While you can begin collecting Social Security as young as age 62, your benefits will be smaller than if you had waited to full retirement age (66) or later. But while waiting longer can mean more money monthly, it may result in less money overall if you die early, so selecting the right age to file is a critical component to maximizing your benefits.
Kevin Worthley, a certified financial planner with the Retirement Co. of New England, says it is important to make the right decision about when to file because there are almost no second chances when it comes to Social Security.
"There used to be a strategy called a do-over where recipients could receive benefits early, then years later withdraw their application, repay the benefits received and then reapply for benefits going forward at a higher payout," Worthley says. "The technique was overly promoted and somewhat abused, so the Social Security Administration curtailed the technique recently by only allowing a do-over if implemented within 12 months of the original receipt of income benefits."
So to get it right the first time, avoid committing these seven Social Security sins.
1. Waiting past age 66 to file
Even if you don't intend to collect benefits until after age 66, don't forget to file by the time you reach full retirement age. If you don't wish to collect at that time, simply indicate that you want to suspend your benefits so they can keep growing.
Failing to file by 66 negates the possibility of earning a full lump-sum repayment if you later decide you'd rather have collected those suspended benefits (such as might occur if you suffer health problems in your late 60s). In that scenario, the lump-sum option will award you all you would have collected to that point at once, but this works only if you filed on time.
In addition, using a "file-and-suspend" strategy can also allow your spouse to begin collecting benefits while you continue working.
2. Waiting past age 70 to collect
There is a financial incentive for seniors to delay collecting Social Security past their full retirement age. For each year they wait, their benefits get a bump of between 5.5% and 8%. However, there are no additional benefits for waiting past age 70. At that point, any further delay in collecting simply means money lost.
3. Neglecting spousal benefits
Social Security offers several options for spousal benefits, so don't miss this opportunity to bring in some extra cash if you or your spouse is eligible. For example, if you are collecting benefits and your spouse is at least 62 and isn't collecting benefits, your spouse is eligible for a separate spousal benefit. The beauty of this arrangement is that it doesn't diminish your benefits in any way.
"In addition, a spouse who has reached full retirement age and whose spouse is already receiving a benefit can claim a spousal benefit while continuing to work and letting his or her own benefits grow for the future," says Worthley.
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I am surprised by the number of people who get all stirred up over the SS "created crisis". It is a non issue. It really is not a problem. It is the easiest solvable problem the Gooberment has today. They will either raise the ceiling limits on contributions or raise
the tax rate of SS by 1 or 2%. As it is now with no modifications it is good til like 2037 at full benefits. All this nonsense is to distract from the real problem which is the ECONOMY.
I have a solution to all of this made easier thanks to my former employer who laid me off 3 years ago after 16 years and now being at age 58 severely underemployed and lucky to get 2 or 3 shifts a week as a security guard. This after a pretty good Corporate career with many accomplishments.
Yeah I worked for it and earned it.
YES OBAMA I WILL REMEMBER THESE 4 GREAT YEARS COME NOVEMBER.
TAKE IT AS SOON AS I HIT 62!
Do I know I will live to 66?
Do I know I will live to 70?
Do I even know I will make it to 62 in a few short years?
So as long as I am alive I will grab at the first available chance and be fine with the amount I receive for all my years I have worked which now is at 39.
Screw the wait for a few hundred bucks more - be smart and realize -you may not be there to collect when you want to.
To "Just slap me"
You do not have a clue as to soc security and how it works. That was the dumbest thing I have ever heard. Blaming the GOP for SS woes. The govt has been taking SS since it inception to pay govt bills. It is taken to pay for govt programs. I am sorry but govt is not the answer and the GOP is not the problem. It is govt spending more than it takes in. Like duh you damn ****!
I HAVE A SOLUTION PAY ALL THE PEOPLE IN THE WHIT HOUSE $10 HRTHAT WILL FIX ALL.
What I'd like to know, is how does the SS department get to change the rules without the public being fully informed and without Congressional approval???
Hmmm, either this article is total BS or someone in Congress needs to get on the ball!
Just too many uncertainties...
The Potus "Lord of the gifts" is in such a giving mood to try and get re-elected so I wonder:
What is the age where Obama will allow all the illegals to get theirs?
25? With full benefits at 30?
I don't know any one guaranteed to live twenty years. I'd be pissed as hell waiting to age 65 or 70 to die shortly thereafter. The same leaving 18, 15, etc. years of lottery money on the table.
Give me my flowers now Lord.
If you remember, Social Security was started in the 1930's during the Great Depression, that happened
because of the greedy millionaires who crashed the Stock Market in 1929. FDR wanted people to have
the ability to put some of their money away for their retirement years. They had nothing to fall back on
during the Great Depression.
Ronald Reagan started raiding the Social Security bank in the 1980's when he closed all of the
government mental hospitals. He started the SSI program, which gave the mental
patients a monthly payment of $600 from Social Security. In my area, that created a lot of homeless
people begging on the street corners. They were not able to care for themselves. I am sure that the
money he saved by closing hospitals has created a bigger debt to the nation with the huge amounts
taken out of Social Security by people who never paid into it. Social Security was created for workers
to put money aside for their retirement, not for people who claimed to be too mentally upset to hold
down a job and pay their own Social Security deposits. FDR created it as a "safety net" for workers.
I say in the memory of Rodney King "Can We All Get Along" and leave race out of this, please!!
Look during the (DEM) Clinton administration they changed the rules making SS taxable so understand you and your employer or you if your self employed are TAXED for SS. now when you receive it your are taxed on what you received so you are taxed on tax can we say double taxation. No one should be taxed on any income up to the poverty level so when we started taxing SS we drove the elderly into poverty. Second there is a government web site by the accounting office that says if we raise the ceiling all SS. problems go away, if we have a life expectancy to 88 figure how much you would have to put in and let that be the cut off amount. that means the rich would continue to participate, SS. is only a poor mans tax.
Remember one thing while voting the DEM's had control of the House and Senate during the last two years of the Bush administration and they did nothing and the economy started tanking, they also had control of the House and Senate during the first two years of the Obama Pres. and did they care for the spanish imigrants untill re-election looked like it was getting in trouble.
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