Source: Forbes
Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security.
I’ve been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR’s website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company’s site, www.maximizemysocialsecurity.com, and click More Press below the WSJ quote.
Today’s question is about whether it’s best to claim on your ex’s record before FRA or to delay retirement. It highlights how different maximized filing strategies affect future options.
Question: I was married for 15 year and have never remarried. I’m told I can claim benefits on my ex’s Social Security. I am 65 and will reach full retirement age in April this year.
Answer: This is true. But if you haven’t taken your own retirement benefit up until now, consider waiting until 70 to do this. At 66, when you’ll reach full retirement age, you should apply for your spousal benefit and you’ll get half of your ex’s full retirement benefit. If you take your retirement benefits now, you’ll be forced to take your spousal benefit now as well thanks to Social Security’s deeming provision. In this case you’ll get your reduced retirement benefit plus your excess spousal benefit if it’s positive. Your excess spousal benefit will equal the spousal benefit reduction factor multiplied by a) half of your ex’s full retirement benefit less b) 100 percent of your full retirement benefit. I.e., this “excess spousal benefit” will be zero if your own full retirement benefit exceeds half of his. This will likely be the case unless you had extremely low earnings. So taking your retirement benefit early will likely wipe out your spousal benefit forever. Not a good idea!