Social Security might appear fairly straightforward, but there are plenty of tricks to make the most of it. They’re not sneaky tricks either – they’re just smart ones that will save you thousands of dollars if you know how to use them. If you’re married, divorced, widowed or still employed – there is probably a small loophole that applies to you. It’s all about timing, planning & knowing what benefits you’re entitled to.
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File and Suspend (for Married Couples)
Until recently, this technique was the go-to tactic among married couples. One partner (usually the more-high-earning one) applies for benefits, but suspends them (i.e., doesn’t take payments yet). The cool part? The other spouse can begin to receive spousal support and the first spouse’s payments continue to accrue due to delayed retirement credits. Although the rules have changed somewhat, this still applies in certain situations, especially if you filed before the rule change in 2015.
Claiming Spousal Benefits
Did you know you can receive up to half of your spouse’s full retirement payout? This is good if your benefit is low. This is how it works – you grow your own benefits while collecting spousal benefits. After you reach 70, you can switch to your higher personal benefit. It’s like having your cake and eating it too, but make sure your spouse has already filed for benefits.
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Divorce Benefits Loophole
If you’ve been married for at least 10 years and haven’t remarried, you may be eligible to receive benefits on the basis of your former spouse’s record. This doesn’t affect their benefits at all, so don’t have to ask them (or even tell them!). You can get up to 50% of their benefit, which is handy, especially if they were the one who earned more in the marriage.
Delayed Retirement Credits
This is where patience pays off. For every year you defer drawing benefits past full retirement age, you earn an additional 8%. If you wait until 70 when your full retirement age is 67, you’ll get a 24 percent increase for life! For those of you who don’t really need the money, this is an easy way to get more from Social Security.
Earning Extra Credits Before Claiming
You receive your Social Security payments based on your 35 greatest-earning years. If you are still working and making more money than you were when you were younger, those higher figures will replace the lower ones. And that means your benefits may increase each month. Even working part-time for just a few more years is worthwhile if it increases your average earnings over the lifetime.
Double Dip for Widows and Widowers
If you have lost a husband or wife, you have options. You can get survivor benefit (based on earnings history) as early as age 60, while you grow your own retirement income up to age 70. Or you can take your retirement benefits first and switch to your survivor benefits later if they’re higher. All you need to do is add it up and see which one pays you the most in the long run.
Working While Collecting Benefits
If you’re working and getting benefits before full retirement age, Social Security will withhold a portion of your benefits if you earn more than a certain threshold. But here’s the good news – the money doesn’t go away permanently. As soon as you reach full retirement age, they adjust your benefit to reflect the amount they withhold, so later on you’ll get bigger checks. This is great if you need to work but don’t want the whole payout immediately.
Disclaimer: This list is solely the author’s opinion based on research and publicly available information.
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