Massachusetts Estate Planning & Asset Protection Blog

You Can Maximize (and Minimize) Your Social Security Benefits

Posted by Dennis Sullivan & Associates on Tue, Jul 26, 2011

One of the most important decisions seniors face is when to take Social Security.  According to experts, it's best to delay collecting until age 70, if possible, at whic time one would receive the greatest monthly benefit.  According to Jason Fichtner, a senior research fellow at the Mercatus Center at George Mason University, "Far too often people choose to begin Social Security retirement benefits at age 62, not realizing that there's a 6% reduction in benefits for each year below the full retirement age."

With full retirement age now at age 66, Fichtner said that to take benefits at age 62 would result in a 30% reduction in monthly benefits. "If that same person waited until age 70 to begin benefits, the monthly payment would be 76% higher than that age 62 initial benefit and 32% higher than initial benefit if they claimed at age 66," he said.

To help people decide when might be the best time for them to claim these benefits, there are online calculators, some of which are free, including one by AARP.

These online calculators help people to make an informed decision according to their particular circumstances.  The calculator asks a series of questions to the user and provides estimates for both monthly and lifetime benefits across different ages. It also allows users to customize their use by calculating spousal benefits and the impact continuing to work might have while collecting benefits.  It also allows users to compare estimated monthly benefits to expected expenses in retirement and print a personalized summary report.

Another piece of the puzzle it includes is that it also asks whether you are married or divorced and advises users of some unknown claiming strategies like the file-and-suspend or claim-now-claim-more-later strategies for married people.  It also includes divorced-spouse benefit strategy.

Although no online calculator is perfect, the AARP calculator is simple and quite user friendly and does give good information.  Other available free tools are found at the following sites:

* The Social Security Administration's website


* The Social Security Claiming Guide, offered by the Center for Retirement Research at Boston College

Fee-based tools are available at the following sites:

* Social Security Solutions.

* Maximize My Social Security

To learn firsthand how to make the most of your retirement earnings and how to protect them and all your other assets from taxes, probate, and increasing medical and nursing home costs, register online for one of our Trust, Estate & Asset Protection workshops or call 800-964-4295.



Tags: Retirement, social security, file-and-suspend, online calculator

Does "File-and-Suspend" Result in Higher Social Security Benefits?

Posted by Dennis Sullivan & Associates on Fri, Jul 15, 2011

There are unique strategies that married couples may take advantage of to increase their Social Security benefit. 

One such opportunity is called, "file-and-suspend."  This can allow a couple to increase their Social Security retirement and survivor benefits.  It is most widely used when one spouse has a much lower lifetime earning benefit than the other. 

This is how it works.  Under Social Security rules a spouse who is eligible to file for benefits based on his/her spouse's record cannot do so until his/her spouse begins to receive those benefits.  With file-and-suspend someone who has reached full retirement age may choose to file for retirement benefits, then have those benefits suspended immediately so that his/her eligible spouse can file for spousal benefits (50%).  Therefore, the lower-earning spouse will immediately be able to receive a higher benefit, based on on his/her spouse's earnings record. 

In addition to increasing monthly retirement benefits, file-and-suspend also increases survivor benefits.  By suspending his/her benefits, the higher earning spouse earns delayed retirement credits at 8% per year (if you were born in 1943 or after) until age 70.  Since a surviving spouse usually receives 100% of whatever the other spouse was receiving (or was entitled to receive) at the time of death, suspending  a benefit to earn retirement credits can substantially increase the survivor's benefits.

For example: 

George is 66 (full retirement age) but wants to wait til he's 70 to retire.  If he waits, his benefit will go from $2,100 to $2,750 - 32% more per month because of retirement credits (8% for 4 years).  His wife, Mary, on the other hand, is also 66, but she wants to retire now.  Because she was an at-home mom, raising their three children, her lifetime earnings were substantially lower than George's.  She would only be eligible for $650.  However, because of George's $2,100 benefit, Mary would be entitled to 50% of George's benefit or $1,050.  To take advantage of this, George files for his benefits and then immediately suspends them, which will give Mary her increased benefit and will allow his suspended benefits to accrue at 8% per year (32%) until he retires at age 70 in 4 years.

This also increases Mary's survivor benefit because she would be entitled to 100% of whatever benefit George was receiving (or should have received) at the time of  his death.

Certainly there are many issues to consider surrounding when to begin receiving Social Security benefits.

For more information about estate planning and retirement strategies, watch our Estate & Retirement Planning videos or register online or call 800-964-4295 (25/7) to attend one of our Trust, Estate and Asset Protection Workshops.

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Tags: Retirement, social security, file-and-suspend

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