Social Security applicants now have fewer filing options than they had in the past, but there are still some strategies that can help you maximize your benefits for yourself and your loved ones.
The first thing you need to understand about Social Security is that when you file for one type of benefit, such as a spousal benefit, the Social Security Administration will deem you to have filed for every type of benefit for which you're eligible, including spousal, family, or individual benefits. This means that you can no longer file for just one type of benefit if you're eligible to receive at least two types of benefits. It will also begin paying you an amount that is approximately equal to the largest of these benefits unless you opt to suspend your benefits. If you suspend them, then you will not receive payments until a time of your choosing or your maximum retirement age.
The best solution
Generally, the best choice you can make when it comes to maximizing your Social Security benefits is to wait until you have reached the maximum retirement age of 70 to begin taking them. If your full retirement age is 66 and your Social Security benefit at full retirement age is going to be $2,000 per month, then you will receive 32% more, or $2,640 per month, at age 70. If you live to be 90 years old, then you will receive a total benefit of $576,000 over 24 years if you take benefits at your full retirement age, whereas you will receive a total of $633,600 over those 20 years if you wait to take benefits at the maximum retirement age.
That said, some people will still be better off taking Social Security earlier, particularly those with shorter projected longevity. Those who have spouses who earn more than they do may also come out ahead by claiming their benefits early and allowing their spouse to suspend his or her benefits until they reach the maximum retirement age.
If you are single, or if you are divorced and were married for at least 10 years and do not plan to remarry, then waiting until age 70 is virtually always the best choice. You can collect a spousal benefit once you reach full retirement age and suspend your own benefit until you reach age 70. If you are widowed, then you can collect survivors benefits at age 60 (or 10 years sooner if you are disabled) and suspend your own benefit until age 70, allowing it to accumulate delayed-retirement credits.
Suspension of benefits and the four-year window
If you were born after Jan. 1, 1954 and you began taking Social Security retirement benefits early, then you can still suspend your benefits when you reach full retirement age and allow them to grow by 8% each year until age 70. However, your spouse will not be able to collect any type of spousal benefit off of your record in the meantime. If you are married and your spouse is at least four years older or younger than you, and the younger of the two of you turned 62 by the end of 2015, then he or she can still file for a full spousal benefit after reaching full retirement age and suspend their own individual benefit until they reach the maximum retirement age.
If you are a divorced spouse who turned 62 before Jan. 1, 2016, then you can still claim spousal benefits based upon your ex-spouse's earnings, even if your ex has elected to suspend their benefits. You can then suspend your own benefit until you have reached the maximum retirement age if you so choose.
If you and/or your spouse does not exactly meet any of the criteria listed here, then you probably need to enlist a professional to help you determine the option that is best for you. Filing for Social Security benefits can be a tricky proposition in many cases, and several factors, such as your job circumstances, other sources of retirement income, and projected longevity, must be considered in order to make the best possible decision. In many cases, you will need to have your advisor run several possible scenarios through a financial-planning program that has been updated with the new filing rules. For more information on Social Security and the filing options that are available for you, visit the Social Security website.
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