INCOME MATTERS – VOLUME 5
Special Retirement Planning Bulletin
Maximizing Social Security Income
In this article, I want to tell you about four ways you can maximize your Social Security payments—and I bet you’ll find there’s at least one you weren’t aware of.
Method 1: Delaying Payments
Except in special circumstances, you can begin receiving Social Security benefits at age 62. But because this is before full retirement age, you may only receive 70 to 80 percent of the benefit you’re entitled to. Once you trigger it, this is the payment you’re locked into for life. If you wait until your full retirement age, however, (which varies based on your date of birth) you will get 100 percent of the benefit. Even better, if you hold off on receiving benefits until age 70, you can gain an added 8 percent per year over your full benefit.
Method 2: Consider Your Life Expectancy
No matter how long you wait to take your Social Security benefit, it only pays out over your lifetime. For some, namely those with a long life expectancy, it’s well worth delaying payments until age 70 in order to get the added credits and higher payment. But for those with a shorter life expectancy, delaying could result in a net loss over taking benefits at age 62.
Method 3: Invest Social Security Income Into an Annuity
Social Security income provides a predictable source of cash throughout retirement—but that doesn’t mean it has to be used in that way. The Social Security benefits you receive can be grown by using them as premium payments for a fixed indexed annuity. Through this approach, not only do you gain the predictable, lifetime income of an annuity, but you also enjoy some participation in market upswings while protecting all your Social Security income from losses. You can also design the annuity to provide death benefits, inflation protection and nursing home benefits.
Method 4: Claim the Spousal Benefit Even if You’re Divorced
If your former spouse earned more money than you did and, as a result, is entitled to a larger benefit, then it could be in your best interests to claim spousal benefits rather than your own. You can do this even if you’re divorced as long as you meet some requirements, including:
- You are not currently married
- You were married at least 10 years to your former spouse
- You are at lesat 62 years old
- Your ex is eligible to receive benefits, even if he or she isn’t currently taking them.
The strategies associated with increasing Social Security payments may be helpful, but they can also be complex. Make sure you get some assistance as you’re making your final decisions.
In the next issue of the INCOME MATTERS series, we’ll discuss how annuities and help solve your post-retirement income concerns as well as many others. For more information about financial services that can help you, be sure to read about our financial services or contact us for more information.