What can married couples do to increase joint
lifetime benefits?



What is
your “magic number”?
 Roughly
half of retirees claim Social Security benefits at age 62, as soon as they
become eligible. Some people delay benefits and postpone using their retirement
savings as an income source. Others apply out of necessity; their financial
situation leaves them little choice.1



These
factors aside, what if you have a choice? If you wait a few years to apply for
Social Security, how much more income might you realize?

Could you wait until age 66? The Social Security Administration has
made 66 the “full” retirement age for people born during 1943-1954. If you were
born in this period and you apply for Social Security at age 62, you will
reduce your retirement benefit by 25% and your spouse’s by 30%.2,3

That alone might convince you to wait. In addition, there are claiming
strategies that may bring spouses much greater cumulative lifetime Social
Security income, and they depend on one spouse waiting until age 66 to apply
for benefits.



That may be the time for a file & suspend strategy. This tactic
positions a married couple to receive maximum Social Security benefits at age
70, with one spouse being able to claim some benefits at age 66. 

An example: Terry was born in 1947 and Teresa was born in 1951, so full
retirement age is 66 for both of them. Terry files his claim for Social
Security benefits at age 66, but then he elects to suspend his $2,000 monthly
retirement benefit. Doing that clears the way for Teresa to get a $1,000
monthly spousal benefit when she reaches 66; she can do this by filing a
restricted claim for spousal benefits only at that time.4

So while some spousal benefits are rolling in, Terry and Teresa have both
elected to put off receiving their own Social Security benefits until age 70.
That allows each of them to rack up delayed retirement credits (8% annually)
between 66-70. So when Terry turns 70, he is eligible to collect an enhanced
benefit: $2,640 per month instead of the $2,000 per month he would have
received at age 66. At 70, Teresa can switch from receiving the $1,000 monthly
spousal benefit to collecting her enhanced benefits.1,4



Variations
on file & suspend.
 There are other ways to do this. For example, 66-year-old Terry
could initially apply for Teresa’s spousal benefits as Teresa applies for her
own benefits at 62. Terry thereby gets $800 a month while Teresa receives her
own reduced benefit of $1,200 a month. At 70, Terry foregoes getting the
spousal benefit and switches to receiving his own enhanced benefit ($2,640 a
month thanks to those delayed retirement credits). If Terry lives to age 83 and
Teresa lives to age 90, their total lifetime Social Security benefits will be
$1,043,520 under this strategy, as opposed to $840,600 if they each apply for
benefits when they turn 62.1

Widows can also use a variant on the file-and-suspend approach. As an
example, Fran is set to receive $1,400 monthly from Social Security at age 66.
Her husband dies when she is 60. She can get a widow’s benefit of $1,430 at 60,
but instead she claims her own reduced benefit of $1,050 at age 62, then
switches to a widow’s benefit of $2,000 at 66 (her husband would have received
$2,000 monthly at age 66). By doing this, she positions herself to collect
$112,000 more in lifetime benefits.1

Postponement can also be used to enlarge survivor benefits. Let’s go back
to Terry and Teresa: if they each start getting Social Security at 62, Teresa
is looking at a $1,650 monthly survivor benefit if Bob passes away. But if
Terry waits until 66 to claim his benefits, Teresa’s monthly survivor benefit would
be $2,640.1



Details
to note.
 The
file-and-suspend strategy is only allowable if one spouse has reached full
retirement age. In order for you to claim a spousal benefit, your husband or
wife has to be getting Social Security benefits. Applying for Social Security
before full retirement age with the idea that your spouse can collect spousal
benefits at 62 has a drawback: you are reducing both of your lifetime
retirement benefits.5



Only 29%
of respondents in a 2012 AARP survey knew that waiting until age 70 to apply
for Social Security would bring them their maximum monthly benefit.
Congratulate yourself for being in that group, and consider the long-range
financial merits of claiming your benefits years after age 62.6

This material was prepared by MarketingLibrary.Net Inc., and does not
necessarily represent the views of the presenting party, nor their affiliates.
All information is believed to be from reliable sources; however we make no
representation as to its completeness or accuracy. Please note – investing
involves risk, and past performance is no guarantee of future results. The
publisher is not engaged in rendering legal, accounting or other professional
services. If assistance is needed, the reader is advised to engage the services
of a competent professional. This information should not be construed as
investment, tax or legal advice and may not be relied on for the purpose of
avoiding any Federal tax penalty. This is neither a solicitation nor
recommendation to purchase or sell any investment or insurance product or
service, and should not be relied upon as such. All indices are unmanaged and
are not illustrative of any particular investment.   



Citations.

1 –
www.smartmoney.com/retirement/planning/strategies-to-max-out-social-security-benefits-1329243329517/
[3/2/12]

2 – www.ssa.gov/retire2/retirechart.htm [11/15/12]

3 – www.ssa.gov/retire2/agereduction.htm [11/15/12]

4 – www.investmentnews.com/article/20121105/BLOG05/121109984 [11/5/12]

5 – www.nextavenue.org/article/2012-08/how-avoid-making-social-security-mistakes [8/6/12]

6 –
www.aarp.org/about-aarp/press-center/info-02-2012/new-aarp-survey-shows-many-unaware-of-social-security-claiming-strategies.html
[2/29/12]



This material was prepared by Peter
Montoya Inc, and does not necessarily represent the views of The Retirement Group
or FSC Financial Corp. This information should not be construed as investment
advice. Neither the named Representatives nor Broker/Dealer gives tax or legal
advice. All information is believed to be from reliable sources; however, we
make no representation as to its completeness or accuracy. The publisher is not
engaged in rendering legal, accounting or other professional services. If other
expert assistance is needed, the reader is advised to engage the services of a
competent professional. Please consult your Financial Advisor for further
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