Work with an expert to explore your Social Security options
One of the most important assets during retirement is Social Security. Half of all people claim it at age 62. Baby Boomers, who are retiring now, are giving up 25 percent of their lifetime benefits. If you have an income plan that allows you maximize these assets, there are many strategies. You should work with an expert to study your choices. The Social Security Office can answer questions, but they are not allowed to give advice.
One of the main determinations of how much Social Security income you will get is your Primary Insurance Amount. This is calculated when you reach age 62. The Primary Insurance Amount takes the highest 35 years' work wages and combines them with blend points. If you have less than 35 years, Social Security would apply zero for the income of missing years. If you continue to work after 62, the additional earnings could replace some of the zeros or lower earning years. Social Security provides estimates of your Primary Insurance Amount at 66 and 70 assuming you had the same average earnings. Your Primary Insurance Amount is important to a spouse if they are claiming spousal benefits or survivor benefits.
There are different strategies that must be considered. If a husband waits until age 70 to start collecting his benefit, they have grown at 8 percent since full retirement age of 66. After age 70, the benefit does not increase. If the husband passed away at age 71 with a $3,000 per-month benefit, what would his 60-year-old wife's survivor benefit be? Many people would say $3,000. This would be incorrect. She would receive $2,145 or 71.5 percent of his monthly income. This is because she has not reached full retirement age of 66. At that time, she would have received the full $3,000 if she waited.
Some people think that you should file and suspend at age 66 in case your health changes for the worse. While you could apply for back payment to the date you filed, you will not receive delayed credits for the additional years. However, you cannot file for spousal benefits while you have your own account suspended. You cannot have both spouses collecting spousal benefit from each other's accounts at the same time. Also, while you can collect benefits from an ex-spouse if you were married for 10 years, you cannot collect spousal benefits from their Primary Insurance Amount and let yours grow until age 70 unless you are full retirement age.
If a worker, say age 64, lost his job and needed to file for Social Security, he would receive reduced benefits from if he were full retirement age. If after a few months of collecting Social Security, he found a new job, he could notify Social Security and have his checks stopped. If he was able to work the new job until age 66, his Primary Insurance Amount would be higher that he was receiving at 64. It would be a little lower than if had not needed to take the several months when laid off to account for the money that he already received.
Remember, voluntary suspensions can only be done after you reach full retirement age. If a worker takes Social Security at age 62 and then the spouse tries to take a spousal benefit when he or she reaches 62, he/she will not receive half as much. It will be closer to 35 percent. This can have a large effect on benefits over a lifetime when you consider cost of living increases. Make sure that your advisor understands this important topic, or it can cost you a lot of money.
Gary Boatman is a certified financial planner and local businessman who serves as president of the Monessen Chamber of Commerce.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Mon Valley YMCA scholarship auction planned
- Many musicians enjoyed roles in legacy of Harmoneers
- Frazier cross country letter winner stays on the run
- Luck runs out for fugitive ‘Jinx’ Law
- Arrest made in connection with Rostraver home invasion
- Donora man accused of hours-long assault of woman
- Rostraver woman victim of home invasion
- 3 men arrested on drug charges in Donora
- California University police officer alleges discrimination
- Preservation project set for I-70 bridge
- Salvation Army honors Mon Valley do-gooders