Are you wringing all the money you can out of Social Security?
Based on my reader mail, I worry that some of you are losing out. Here are quick answers to the questions I get the most.
What can you apply for?
Retirement benefits, based on your own lifetime earnings. Spousal benefits, based on a living spouse's lifetime earnings. Survivor's benefits, payable after a spouse's death.
You can effectively collect only one of these benefits at a time. Social Security automatically gives you the largest check you're entitled to. Children might get benefits, too.
What's the best age to claim?
This varies a lot. In general, your check is always reduced for life if you file for any benefit before what Social Security calls your "normal retirement age." That's 66 for people born from 1943 to 1954 and rises gradually for every birth year through 1959.
For those born in 1960 or later, normal retirement age is 67. There's a fat bonus for collecting your benefits late: Social Security pays you an extra 8 percent for every year past "normal" that you delay your claim, up to age 70.
Can you claim a benefit as a spouse and later switch to benefits based on your own earnings record?
Yes, provided you wait to file for spousal benefits until you reach "normal" (or "full") retirement age. You might collect a spousal benefit check from, say, age 66 to 70, then put in for your personal retirement benefit, which will have grown.
This strategy does not work, however, if you file before you reach your normal retirement age. Early filers receive a benefit amount equal to the spousal benefit or their own retirement benefit, whichever is higher. Never both.
Does it ever pay to collect benefits early?
For many married couples, yes. A wife, for example, might retire early on a reduced benefit. When her husband reaches normal retirement age, he can file for spousal benefits on her account. When he reaches 70, he can switch to his own, larger retirement account. How well this strategy works will depend on your ages and which of you is the higher earner.
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What if you're divorced?
You can claim spousal and survivor's benefits on your ex's earnings record if you were married for at least 10 years and are not currently married. (Exception: You can keep the survivor's benefits if you remarry after you pass 60.) Your ex has to be eligible for Social Security, even if he or she has not yet retired.
What if your spouse dies?
If you've been collecting a spousal benefit, you can step up to the larger survivor's benefit. To get the maximum amount, consider putting off your claim until you reach normal retirement age.
You might make a different choice, however, if you have a substantial Social Security earnings record of your own. You might take the survivor's benefit early, then switch to your own, larger benefit at a later age. Play with the numbers until you get it right.
- AARP: Social Security Calculator
- Government: Social Security Administration, ssa.gov, 800-772-1213, or any Social Security office
- Commercial services: SocialSecurityChoices.com, SocialSecuritySolutions.com, and Maximize My Social Security's website.
- New books: Get What's Yours: The Secrets to Maxing Out Your Social Security, by Laurence J. Kotlikoff, Philip Moeller and Paul Solman; Personal Finance for Seniors for Dummies, by Eric Tyson and Bob Carlson; Social Security for Dummies (Second Edition), by Jonathan Peterson
Jane Bryant Quinn is a personal finance expert and author of Making the Most of Your Money NOW. She writes regularly for the Bulletin.