Most people are aware that if you wait until age 70 to file for your Social Security benefits, your monthly benefit will be a lot higher – 32% higher to be exact. And one of the greatest things about this is that not only will you receive this higher benefit for the rest of your life, your spousal benefits will also be based on the higher amount for the rest of your spouse’s life!
So when you reach age 66, the conventional thinking is that you don’t need to do anything. Just don’t file for benefits and everything will be good. You’ll automatically receive the higher benefit.
While this is true, I recommend something a little different to my clients. That is to file for your Social Security benefits when you’re 66, but then suspend payment of the benefits. What’s the difference? Well, if you use this approach, and change your mind anytime between the ages of 66 and 70, you can reinstate your benefits. And not only that, you can request that the Social Security office send you the benefits for all of the months that your payments were suspended!
This approach allows you to have it both ways. File and suspend your benefits at age 66 and you’ll start receiving the higher monthly amount at age 70. But if you encounter unexpected difficulties, such as financial or health issues, just ask Social Security to send you all of the benefits that have accumulated, which could be well over $100,000!
When I advised a client to utilize this approach, the Social Security office told him that he was incorrect – that he couldn’t get benefits retroactively. So I called the Social Security office and they told me the same thing, until I pointed out this page on the Social Security website to the representative: http://www.ssa.gov/retire2/suspend.htm.
His response: “Gee, I’ve never heard of that.”
The moral of the story is don’t seek advice from the Social Security office about your claiming strategies. Get in touch with a fee-only financial advisor who has an extensive knowledge of the complicated Social Security rules, and who will look out for your best interests.
If you would like to discuss the claiming strategy that will work best for you, or if you have other financial issues you would like to go over, please contact me.