If you’re contemplating looking closely at your Social Security options, the first rule is: Don’t depend on the Social Security Administration to come running with individual advice. The administration makes the options (many and often confusing) available. You’re on your own to do the research and determine what approach is best for you.
William Meyer operates a website, Social Security Solutions, which, for a fee, looks at your data and suggests the best solutions. He advises, based on long experience, that if you are considering a less-common choice for receiving your SS benefits, that you go directly to the nearest SSA office. You can’t depend on the agency following electronic requests if they are out of the ordinary, he said.
The obvious choice for maximizing your SS payments is to begin collecting benefits after age 70. The monthly payment at that age is 76 percent higher than if you start getting checks at age 62; 32 percent higher than if you made your first claim at age 66. That means, of course, that you must bank on longevity, gambling that you’ll live long enough to collect the higher payments to more than break even. If you live until age 90, you will accumulate almost $162,000 more in benefits.
However, Merton Bernstein, retired law professor and SS expert, advises acting on the side of the odds. He says the longevity odds are so bad that it’s a rash bet. “Take the money and run,” he suggests.
Marital status has a large bearing on SS issues. If you choose to divorce after less than 10 years, you lose the opportunity to collect SS benefits based on up to half of your ex’s earnings or on the basis of your own earnings, whichever is greater.
The sad truth is that if you don’t remarry, your ex-spouse is worth more to you dead than alive, especially if he or she was a high earner, says Carol Thomas, who worked for the SSA for more than 28 years. She answers questions about SS at RetirementCommunity.com. When an ex-spouse dies, you will be treated just like a widow or widower, she said. If you are at least 60, you can collect your expired spouse’s benefit, allowing your own benefit to grow unclaimed until you reach age 70. Then you can switch if your own is higher.
The longer the ex-spouse works, the better your associated benefits will be, so if it is feasible, encourage him or her to stay employed at least until age 70. Then at the death of the ex-partner, you can claim half of his or her maximum SS.
There are key differences between spousal and widow/widower benefits that can be very confusing, said Dan Keady, director of financial planning tor TIAA-CREF Financial Services. A widow or widower can begin benefits based on his or her own earning record and later switch to survivors benefits. Or he/she can begin with survivors benefits and later switch to benefits based on his/her own earnings, even if the surviving spouse is filing before full retirement age. That is not possible with spousal benefits.
Applying for disability insurance, the first step should be to hire a lawyer or other expert adviser, according to the experts. Representatives of the administration won’t tell you that, but it is important to have representation from the outset. An application for disability benefits should be accurate and precise. Small mistakes can interminably slow the process or result in denials. A better explanation of benefits might be found at MyRetirementPaycheck.org, sponsored by the National Endowment for Financial Education.
It’s a long and often complicated process. The answers are available and you should consider all your options. But it may take time and the involvement of others who have expertise.