While working with our clients, much of what we do involves Social Security optimization. There is so much about Social Security that many people do not understand.
People may think they have a sound retirement strategy in place. However, when we start talking about social security planning, we’ve had people tell us they plan to continue working and defer benefits until age 70 from age 66 and they may have a spouse already receiving payments in the form of disability benefits.
In the past they may have been told to file for benefits now but defer the payments until age seventy in order to receive an annual eight percent Delayed Retirement Credit.
We know that you do not need to file and suspend your benefits now to get your eight percent Delayed Retirement Credits. It was going to be an automatic benefit you would get, by not taking your Social Security benefits until age seventy.
There may be other reasons you should file now and suspend the payments. There is one benefit. Under the rule that was in effect at the time, you could receive a lump sum in the amount of your deferred benefits at any point before age seventy.
For example, if you filed and deferred payments at the age of sixty-six, and became disabled three years later, you could go back and get a lump sum of money equaling the three years of payments that you would have received if you hadn’t deferred. (As a side note, the full scope of that benefit is no longer available at the time of this writing. Currently you can only receive a maximum of twelve months of lump sum payments, in the same situation.)
To use the words of the old Ginsu commercial: Wait! There’s more!
There may be a much larger opportunity for you. If you had reached your full retirement age of sixty-six years, and your spouse is currently receiving payments, you will be eligible to receive a spousal benefit of fifty percent of your spouse’s Primary Insurance Amount. That is the amount you qualify for at your Full Retirement Age (FRA). Additionally, receiving this spousal benefit would not affect the eight percent delayed retirement credit you would receive on your benefit amount by not taking your retirement benefits until age seventy.
Under the current guidelines, if you were born in 1954 or before, your full retirement age is 66. For every year after that up to 1960 add two months to find your full retirement age. If you were born after 1960, your full retirement age will be 67.
The Social Security Act of 1935 was a law enacted by President Franklin D. Roosevelt. Since then, there have been many changes to the rules along the way. For example, there were no spousal or disability benefits in the original program, and we do not know what changes, if any, may come. That’s why we always recommend that you work with an experienced team that can determine the “sweet spot” for you to receive the most benefit possible from Social Security.
For more information contact the team at Massey And Associates, Inc., Retirement Wealth Advisors at (401) 333-8000 or at www.MasseyAndAssociates.com. The office is located at 250F Centerville Road in Warwick, RI.
Massey And Associates, Inc. is an independent financial services firm that utilizes a variety of investment and insurance products. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Our firm is not affiliated with or endorsed by the U.S. Government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Massey & Associates, Inc. are not affiliated companies. 853774 – 03/21