The Social Security Administration recently put the kibosh on a technique some retirees were using to boost their monthly benefits. But even though that loophole is essentially closed, experts say there are still plenty of ways households can legally maximize the amount of income they receive from Social Security. — MarketWatch
The risky strategy of the Social Security “do-over,” is no longer available, under new rules issued by the Social Security Administration in December. Few people took advantage of this loop hole, but here is basically how it worked: You claim benefits at an early age, and then years later repay what you received – interest-free – and then file for benefits again, getting a higher monthly amount based on your (older) age.
Studies estimated this loop hole could cost Social Security as much as $6 billion to $11 billion per year, and amounted basically to offering an interest-free loan to those wealthy enough to claim it. Under the new rule, you can suspend and re-apply for your benefit only within the first 12 months of applying for Social Security, and you can do it only once during your lifetime.
If you’re looking for ways to (legally) maximize your Social Security benefit, MarketWatch lists these tips:
- Work longer and earn more. Most workers start at a relatively low pay scale, and work their way into higher earnings. If you are at your peak earnings you may want to log as many years as you can at these higher levels to off-set low-earning years and boost your primary insurance amount.
- Delay Applying. Most people claim Social Security as soon as they become eligible at age 65. But there are benefits to waiting. If you claim at age 62, your benefit will be reduced by 25 percent for your lifetime. If you wait until age 70, you’ll get a 32 percent increase in your benefit.
- Coordinate spousal benefits. Married couples can employ strategies to maximize their joint Social Security income. There are many spousal strategies available, and you may want to get professional advice to help you sort them out. The main point is you have to take into account each spouse’s age, their primary insurance amount, and you have to know the rules.
Here are some online resources that can help you maximize your Social Security benefits:
The Center for Retirement Research’s “Social Security Claiming Guide”