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Social Security Overview: Archvest Knowledge Base

John Wenzel | Archvest Wealth Advisors | Sep 22nd, 2015
Category: Archvest in the News

A lot of financial hurdles come across our life as we age. One in particular is Social Security. This is a system that for most, have been paying into his/ her entire working career. Now it’s time to collect the benefit, but what is one to choose? This video will provide an overview of some of the more popular benefit elections one can make.

Strategy 1 - File and Suspend
Who it helps: Couples with a large gap in earned income.

How it helps: This strategy allows the couple to begin their income stream at age 62, while still allowing Frank to maximize his individual benefit. It also increases Ellen's monthly benefit by $500 at her FRA, and allows her to receive the maximum survivor benefit if Frank dies first. Note: Remember that Frank may not receive a voluntary suspension if he files prior to FRA. In a common variation of this strategy, Ellen waits until her FRA to file. This increases her monthly benefit by $150 until Frank's death.

File and Suspend
The File and Suspend Strategy allows flexibility to maximize Social Security retirement benefits, this strategy can work for both married and single filers.

For married filers upon reaching full retirement age, the Primary income earner can file for retirement benefits and then request to have payments suspended. This allows the spouse to claim the spousal benefit while the primary income earner continues to earn delayed retirement credits until reaching maximum benefits at age 70.

This strategy is flexible as it allows for a one time payout of all the suspended payments.

For Example - John files and suspends his social security retirement benefit at his full retirement age of 66, at age 68 he finds (he has a terminal illness or decides he could use a lump sum of money) he can call Social Security and make a one time request for a lump sum of all of the suspended payments that he would have received had he started collecting at age 66, Social Security will then continue sending him his age 66 monthly benefit.

Strategy 2 - Claim Now, Claim More Later

Who it helps: Couples with similar earned incomes who want to start the benefit stream as early as possible and choose to focus on maximizing benefits prior to age 85.

How it helps: Frank earns an extra $1,000 per month between ages 66 and 70 and is still able to maximize his individual benefit. It also ensures Ellen will receive the maximum survivor benefit if Frank dies first.

Note: Also known as the "62/70 Strategy," this will not work if Frank begins receiving benefits before FRA.

Strategy 3 - Two High Earners (Restricted Application)

Who it helps: Couples with similar earned incomes who can wait until FRA to begin the benefit stream and choose to focus on maximizing benefits beyond age 75.

How it helps: This allows Ellen to receive full spousal benefits at FRA while still maximizing her and Frank's individual benefits. It also ensures Ellen will receive the maximum survivor benefit if Frank dies first.

Note: Both spouses must wait until FRA to file. Because the key to this strategy is maximizing both individual benefits, the longer each spouse lives, the more advantageous this strategy becomes.

Restricted Application strategy
The Restricted Application strategy is designed to maximize social security & survivor benefits for married couples that have reached full retirement age and both have comparable incomes. This works well when one spouse wants to retire and the other wants to continue working to a later age. The spouse that retires claims their Social Security benefit and by doing so allows the working spouse to file a restricted application and collect only the spousal benefit. This allows the working spouse to continue to earn delayed retirement credits up to a maximum at age 70.

For Example - Tom (66) and Jan (66) both qualify for 1000 monthly Social Security Benefit at their current age. Jan retires and files to collect the $1000 monthly benefit, this allows Tom to file a restricted application and collect the spousal benefit of $500 monthly and continue to earn delayed retirement credits on his own earnings record up to a maximum benefit at age 70. Then when Tom reaches age 70 he files to collect his full retirement benefit of $1320 monthly based on his earnings record. This ultimately allows for Tom and Jan to maximize their benefits while they are alive and increase survivor benefit.




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