SOCIAL SECURITY

MAXIMIZATION

    

SOCIAL SECURITY

MAXIMIZATION

 

Social Security Maximization

For many retirees, their Social Security benefit forms the foundation of their retirement income plan. In order to make sure you get the most out of your benefit, you should have a solid grasp on this complex matter. After reviewing the video and Frequently Asked Questions, fill out the below form to meet with us to go over how you can maximize your Social Security benefits.

To hear Social Security Maximization click the video play button

Sociial Security Maximization

Social Security Maximization

For many retirees, their Social Security benefit forms the foundation of their retirement income plan. In order to make sure you get the most out of your benefit, you should have a solid grasp on this complex matter. After reviewing the video and Frequently Asked Questions, contact us to go over how you can maximize your Social Security benefits.

To hear Social Security Maximization click the video play button

Sociial Security Maximization

Social Security Maximization
To hear Social Security Maximization click the video play button

Sociial Security Maximization

For many retirees, their Social Security benefit forms the foundation of their retirement income plan. In order to make sure you get the most out of your benefit, you should have a solid grasp on this complex matter. After reviewing the video and Frequently Asked Questions, contact us to go over how you can maximize your Social Security benefits.

Frequently Asked Questions?

  • Many people wonder how we figure their Social Security retirement benefit. We base Social Security benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth.

    Various Social Security calculators 

     

  • When is the best time to file for Social Security benefits? This straightforward question is among the hardest to answer. In fact, the entire Social Security system, which is intended to be fair and accessible, is mind-numbingly complex. The unfortunate result is that many retirees lose out on valuable benefits, generally because they choose to start to collect too early.

    The Basics

    Most people are eligible to start collecting Social Security benefits at age 62. But if you wait until what the Social Security Administration calls your full retirement age (FRA), which is 66 for those born between 1943 and 1954, you’ll get a larger monthly benefit, known as your primary insurance amount (PIA).
    But keep in mind that the term “full retirement age” can be misleading. In general, your benefits will continue to increase until age 70.
    After you reach your FRA, your monthly benefit will continue to increase until you reach age 70— at which time you max out. The rationale is clear: You can get a smaller payment for a longer amount of time or a larger payment for a shorter amount of time. In theory these two balance out over time, at least when looking at data for millions of people. But when you’re thinking about what’s best for one person or one couple, the averages don’t apply. Once you understand how the system works, you are in a position to make the best decision for your own situation.


    What the Numbers Tell Us


    A comprehensive 2012 study by economists John Shoven of Stanford University and Sita Slavov of Occidental College identifies the conditions when it is most advantageous to delay Social Security benefits. They conclude that gains from delaying are greatest:
    • When interest rates are low
    • For married couples relative to singles
    • For single women relative to single men
    • For two-earner couples relative to one-earner couples
    • For a married couple, deferring the primary earner’s benefit as compared to deferring the secondary earner’s benefit.

  • Social Security Strategies for Spouses


    Working as a team, spouses have some choices that can significantly boost their combined benefit. A warning, though: These types of strategies can get very complex, and their effectiveness depends on a number of variables, including the difference in ages and earnings records between the two spouses.
    With the first strategy, sometimes called the “62/70 split,” the lower earning spouse takes Social Security as early as age 62 and the higher earning spouse postpones filing until age 70 to maximize his or her benefit. With this scenario, the higher earner has the option of receiving a spousal benefit as a bonus during the years that he or she is waiting to claim on his or her own record.
    Alternatively, the higher earner could file for benefits at Full Retirement Age (FRA) and immediately suspend them. This strategy, known as “file and suspend,” allows the lower earner to collect a spousal benefit based on the higher earner’s record, potentially getting more than they receive on their own, while the higher earner’s benefits continue to grow. The higher earner then collects once their benefit has maxed out. A few notes on file and suspend:
    1. You must be at least at your FRA to file and suspend.
    2. Either spouse can file and suspend, but not both.
    3. By suspending, you are not eligible to collect a spousal benefit.
    The only way to determine if either of these strategies will work for your family is by crunching the numbers. So if you’re married and want to maximize your joint Social Security benefits, I highly recommend that you consult with a financial advisor who has in-depth knowledge of the Social Security system.

  • If you are younger than full retirement age and make more than the yearly earnings limit, your earnings may reduce your benefit amount. (Full retirement age is 66 for people born between 1943 and 1954. Beginning with 1955, two months are added for every birth year until the full retirement age reaches 67 for people born in 1960 or later.)
    • If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2017, that limit is $16,920.
    • In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2017, the limit on your earnings is $44,880 but we only count earnings before the month you reach your full retirement age.


    Note: If your earnings will be over the limit for the year but you will be retired for part of the year, we have a special rule that applies to earnings for one year. The special rule lets us pay a full Social Security check for any whole month we consider you retired, regardless of your yearly earnings.


    When you reach full retirement age:
    • Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.

  • Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

    No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

    file a federal tax return as an “individual” and your combined income* is
    1. between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
    2. more than $34,000, up to 85 percent of your benefits may be taxable.

    File a joint return, and you and your spouse have a combined income* that is
    1. between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
    2. more than $44,000, up to 85 percent of your benefits may be taxable.

    File as married and file a separate tax return, you probably will pay taxes on your benefits.

    *Combined income= adjusted gross income + nontaxable interest + ½ of your Social Security benefits.

ARTICLES
  • October 18, 2017
    Social Security Changes Coming in 2018
    Read More
  • October 20, 2017
    What is the Maximum Possible Social Security Benefit in 2017?
    Read More

Frequently Asked Questions?

  • Many people wonder how we figure their Social Security retirement benefit. We base Social Security benefits on your lifetime earnings. We adjust or “index” your actual earnings to account for changes in average wages since the year the earnings were received. Then Social Security calculates your average indexed monthly earnings during the 35 years in which you earned the most. We apply a formula to these earnings and arrive at your basic benefit, or “primary insurance amount.” This is how much you would receive at your full retirement age — 65 or older, depending on your date of birth.

    Various Social Security calculators 

     

  • When is the best time to file for Social Security benefits? This straightforward question is among the hardest to answer. In fact, the entire Social Security system, which is intended to be fair and accessible, is mind-numbingly complex. The unfortunate result is that many retirees lose out on valuable benefits, generally because they choose to start to collect too early.

    The Basics

    Most people are eligible to start collecting Social Security benefits at age 62. But if you wait until what the Social Security Administration calls your full retirement age (FRA), which is 66 for those born between 1943 and 1954, you’ll get a larger monthly benefit, known as your primary insurance amount (PIA).
    But keep in mind that the term “full retirement age” can be misleading. In general, your benefits will continue to increase until age 70.
    After you reach your FRA, your monthly benefit will continue to increase until you reach age 70— at which time you max out. The rationale is clear: You can get a smaller payment for a longer amount of time or a larger payment for a shorter amount of time. In theory these two balance out over time, at least when looking at data for millions of people. But when you’re thinking about what’s best for one person or one couple, the averages don’t apply. Once you understand how the system works, you are in a position to make the best decision for your own situation.


    What the Numbers Tell Us


    A comprehensive 2012 study by economists John Shoven of Stanford University and Sita Slavov of Occidental College identifies the conditions when it is most advantageous to delay Social Security benefits. They conclude that gains from delaying are greatest:
    • When interest rates are low
    • For married couples relative to singles
    • For single women relative to single men
    • For two-earner couples relative to one-earner couples
    • For a married couple, deferring the primary earner’s benefit as compared to deferring the secondary earner’s benefit.

  • Social Security Strategies for Spouses


    Working as a team, spouses have some choices that can significantly boost their combined benefit. A warning, though: These types of strategies can get very complex, and their effectiveness depends on a number of variables, including the difference in ages and earnings records between the two spouses.
    With the first strategy, sometimes called the “62/70 split,” the lower earning spouse takes Social Security as early as age 62 and the higher earning spouse postpones filing until age 70 to maximize his or her benefit. With this scenario, the higher earner has the option of receiving a spousal benefit as a bonus during the years that he or she is waiting to claim on his or her own record.
    Alternatively, the higher earner could file for benefits at Full Retirement Age (FRA) and immediately suspend them. This strategy, known as “file and suspend,” allows the lower earner to collect a spousal benefit based on the higher earner’s record, potentially getting more than they receive on their own, while the higher earner’s benefits continue to grow. The higher earner then collects once their benefit has maxed out. A few notes on file and suspend:
    1. You must be at least at your FRA to file and suspend.
    2. Either spouse can file and suspend, but not both.
    3. By suspending, you are not eligible to collect a spousal benefit.
    The only way to determine if either of these strategies will work for your family is by crunching the numbers. So if you’re married and want to maximize your joint Social Security benefits, I highly recommend that you consult with a financial advisor who has in-depth knowledge of the Social Security system.

  • If you are younger than full retirement age and make more than the yearly earnings limit, your earnings may reduce your benefit amount. (Full retirement age is 66 for people born between 1943 and 1954. Beginning with 1955, two months are added for every birth year until the full retirement age reaches 67 for people born in 1960 or later.)
    • If you are under full retirement age for the entire year, we deduct $1 from your benefit payments for every $2 you earn above the annual limit. For 2017, that limit is $16,920.
    • In the year you reach full retirement age, we deduct $1 in benefits for every $3 you earn above a different limit. In 2017, the limit on your earnings is $44,880 but we only count earnings before the month you reach your full retirement age.


    Note: If your earnings will be over the limit for the year but you will be retired for part of the year, we have a special rule that applies to earnings for one year. The special rule lets us pay a full Social Security check for any whole month we consider you retired, regardless of your yearly earnings.


    When you reach full retirement age:
    • Beginning with the month you reach full retirement age, your earnings no longer reduce your benefits, no matter how much you earn.

  • Some people have to pay federal income taxes on their Social Security benefits. This usually happens only if you have other substantial income (such as wages, self-employment, interest, dividends and other taxable income that must be reported on your tax return) in addition to your benefits.

    No one pays federal income tax on more than 85 percent of his or her Social Security benefits based on Internal Revenue Service (IRS) rules. If you:

    file a federal tax return as an “individual” and your combined income* is
    1. between $25,000 and $34,000, you may have to pay income tax on up to 50 percent of your benefits.
    2. more than $34,000, up to 85 percent of your benefits may be taxable.

    File a joint return, and you and your spouse have a combined income* that is
    1. between $32,000 and $44,000, you may have to pay income tax on up to 50 percent of your benefits
    2. more than $44,000, up to 85 percent of your benefits may be taxable.

    File as married and file a separate tax return, you probably will pay taxes on your benefits.

    *Combined income= adjusted gross income + nontaxable interest + ½ of your Social Security benefits.

ARTICLES
  • October 18, 2017
    Social Security Changes Coming in 2018
    Read More
  • October 20, 2017
    What is the Maximum Possible Social Security Benefit in 2017?
    Read More

Social Security Maximization Form