Masters Series: A Simple Strategy for Maximizing Your Social Security Income
Editor's note: You could be missing out on hundreds of dollars per month in Social Security income... without even knowing it.
In today's edition of our weekend Masters Series, excerpted from a brand-new Retirement Millionaire special report, Dr. David "Doc" Eifrig explains how you may be eligible to dramatically boost the amount of money you collect each month. If you're retired, or even thinking about retiring soon, you need to read today's essay...
A Simple Strategy for Maximizing Your Social Security Income
By Dr. David Eifrig, editor, Retirement Millionaire
"Take care of..."
It's among the scariest phrases in the English language... especially when Wall Street and Washington, D.C. get involved.
Starting today, I want you to realize that Washington isn't here to "take care of" you. Washington is in the business of false promises. Washington is in the business of selling fear so it can collect huge amounts of money from you and me.
Washington calls the money it takes "taxes." And most Americans just pay up. After all, they're being "taken care of."
I want you to end this sort of thinking.
Today, I want to show you a strategy that enables you to turn the tables on the big institutions and corporations that have been preying on retirees for years. I want to show you how to rearrange the details of your retirement so they most benefit you – not the government or any big corporation.
Today, I want you to take control of one of the thorniest retirement subjects – your Social Security benefits.
Most Americans aren't aware that they may be eligible to increase the amount of money they get from Social Security in retirement... in some cases, dramatically boosting their payments.
Most people think the only decision they have to make is when to start collecting – either when they are first eligible at age 62, or later (as late as age 70), when their payments will be bigger.
But the truth is, married couples actually have 81 different ways they can collect Social Security. Some of the approaches enable you to dramatically increase the amount you collect. The finance magazine Kiplinger's says you can bump up your payments by as much as $100,000 over the course of your retirement.
I want to make clear that I don't have any inside tips or secret information.
I don't work for the Social Security Administration (SSA), and I'm not affiliated with the federal agency in any way. What I'm going to explain is public information. You can get it directly from the Social Security Administration...
But you probably don't have hours to spend trying to sort through the sometimes difficult to understand language on the Social Security Administration website.
My team and I have spent a ton of time scouring the SSA's website and dozens of other publications to find the absolute best and proven ways to "boost" your payments.
We've done all of this so you don't have to. Today, I'll detail one of my favorite strategies for boosting your Social Security payments...
Claim Some Now... and More Later
With this strategy, you and your spouse can start receiving Social Security benefits as soon as you are eligible. Then, using something known as the "Spouse Benefits" provision, you can claim a lot more money a few years later.
Kiplinger's columnist Mary Beth Franklin estimates this strategy can boost your income from Social Security by more than 30%.
Before we show you exactly how it works, you need to understand two things:
- The longer you wait to collect, the more you will receive every month.
- Your spouse can collect 50% benefits based on your work record.
Most people assume when they retire, they'll be collecting benefits based on their own work history. However, the government also offers "spouse benefits," which entitle you to collect a monthly check... worth up to 50% of whatever your spouse is collecting.
So here's what you can do...
- First, one member of the couple (let's say the wife) files for benefits as soon as she is eligible. Right now, that's at age 62.
- Simultaneously, the husband files for spousal benefits at 50% of hers. The husband does NOT file for his benefits when he is eligible... Instead, he waits to reach full retirement age (say 66). He delays filing for his own 100% benefits. The longer he waits to file, the more his benefits will be worth.
- Once the husband's benefits are maximized, he files for his own benefits. The wife is then able to "step up" her benefits to the higher payout. (She can collect her benefits plus file for the spouse benefits... up to the total amount that her husband collects.)
Here again: The wife files and the husband gets a spouse benefit. Then a few years down the road, the husband files and the wife gets a spouse benefit.
It sounds a little confusing, we know, but it's definitely worth crunching the numbers.
This is the secret Timothy Westcott and his wife Marilyn, from Minnesota, used. Marilyn wanted to collect Social Security as soon as she was eligible, but Timothy wanted to keep working until he was 70. So Marilyn filed for benefits. When Timothy realized how the system works, he filed to get "spouse benefits," worth 50% of what Marilyn collects.
As Timothy told Kiplinger's...
I never dreamed that I could draw spousal benefits. I submitted my application. And within 10 days, I had received a check for $2,760 retroactive to February 2008.
Timothy and Marilyn added an extra $700 a month to their income... that's $8,400 a year.
When Timothy reaches age 70, he'll file for his own benefits. Marilyn will get Timothy's spouse benefits. And they'll collect an even higher payout.
What's also good is if Timothy dies first, his wife will get a much bigger benefit than she would have received if they had both started collecting their Social Security as soon as they became eligible.
According to a report from the Boston College Center for Retirement Research, titled "Strange But True: Claim Social Security Now, Claim More Later," typically, the higher-wage earner should collect "spouse benefits" when eligible... and delay his or her own benefits to let the payout build up.
Assuming the wife was the lower-wage earner, the way to maximize your total benefits is to have the wife claim benefits at age 62, and the husband delay until he is 69 years old.
And as an added bonus, the spouse receiving spousal benefits can receive a check for up to six months of retroactive benefits... but the claim can only be filed after the recipient is 66 years old. Social Security won't pay retroactive benefits if you're younger than 66.
This means you can add another six months of payments (at 50% of the benefit) to your income. Just tell the Social Security representative you want to apply for retroactive benefits.
Does this strategy work for you?
You must be married. At least one of you must be healthy enough to delay claiming benefits until age 69. And both spouses must have an earnings history. The Boston College study found that the higher and more equal your earnings, the more you have to gain.
One thing to keep in mind: If you start collecting Social Security or spouse benefits before you turn 66, you're locking in a permanently lower percentage for your spouse benefits.
WHAT TO DO: If the numbers make sense, call the Social Security Administration's toll-free number: (800) 772-1213. Set up an appointment with a representative at your local Social Security office. Have them work through the possibilities with you, and take advantage of this extra money. To prepare for your visit, I recommend you read the SSA's site on how to apply for spouse's benefits, which you can read right here.
Here's to our health, wealth, and a great retirement,
Dr. David Eifrig Jr., MD, MBA
Editor's note: Doc just finished a series of reports detailing different ways to collect hundreds of dollars a month on top of what you already receive. He teaches readers how to make extra money every month without working or investing... the investment opportunities your broker will never tell you about... how to take advantage of "loopholes" in the health care system... and how to get everything from vacations to rounds of golf for free.
You can access all of these reports with a four-month, risk-free trial to Retirement Millionaire. We'll also throw in a year of Doc's Income Intelligence advisory COMPLETELY FREE. You can access all of these reports and research for just $39... an incredible 85% off the normal price. Click here to learn more.