Wiregrass Seniors Magazine February 2019 FEBRUARY ISSUE - Page 18

Social Security Q&A Page 18 WiregrassSeniorsMagazine.com If you claim benefits before your FRA and continue to work, your benefits will be reduced by one dollar for every two you earn over $15,480 annually. The amount of this cut can vary. This Some things to keep in mind when planning your Social Security strategy: year, if you earned $20,000, your benefits would Don’t jump too soon. All too often, people are in a be cut by $2500. But if you wait until your FRA to rush to claim benefits to get those monthly checks claim, there’s no offset: No matter how much you coming in. Though you are eligible to receive benefits earn from your work, you get the full benefits you starting at age 62, waiting to claim might be your have coming for claiming at that age. Now that best move, because the longer you wait, until age people are living and working longer, waiting until 70, the larger your check will be, by 8 percent per FRA or longer to claim may be the best option. year, not including the value of compounding — the effect of each annual 8 percent increase on each You and your spouse together might be able to re- previous 8 percent increase). ceive far more money by using a claim-and-sus- pend strategy. If you claim your benefits and sus- This is like getting a certificate of deposit with an pend them to defer payments, your spouse imme- 8 percent annual rate (a rate astronomically higher diately becomes eligible to draw spousal benefits than money markets have provided for years). This based on your claim, provided that he or she is at annual increase may turn out to be more than the least 62. stock market returns annually in the next several years. In addition, benefits increase annually by a cost-of- Let’s say a man who is 66 claims his monthly ben- living (COLA) adjustment. efits of $3,000 per month at the age of 66 and then suspends that benefit. His wife, who is 62, is then And, like the benefit increases, these adjustments accumulate year to year. How long you should wait eligible to receive $1,500 per month on his claim after the age of 62 to claim benefits depends on vari- until she reaches FRA at age 66. In that intervening ous factors, including your health. If you die before four years, the husband’s eventual monthly benefit claiming, there will be no benefits for your estate or checks grows substantially, and he files to remove your spouse. You can get a close idea of your monthly the suspension and receive his maximum benefit at benefit check at different ages by visiting the Social age 70. At this point, his wife is 66 (FRA), and then Security Administration’s benefits web site, and us- claims her own benefit. By using this strategy, they ing its estimator function. If you’ve been meticulously get $1,500 a month income they otherwise never saving your W-2 forms over the years, or if you can would have received while waiting to get a much get access to them through your employer(s), you greater benefit for the husband. can challenge the amount if you believe the SSA has Some people argue that claiming as early as pos- made an error. sible is the best course of action because the So- Know your full retirement age (FRA) — a designa- cial Security program may end due to financial in- tion by the Social Security administration. For many, stability. Well, anything’s possible. But because just depending on their personal situations, FRA may be about everyone eventually will be eligible for these your optimum time to claim benefits. For example, if payments and has had money deducted from their you were born between January 2, 1943, and Janu- checks since their high school jobs, ending these ary 1, 1955, your FRA is 66. You can determine your benefits is something of a political third rail; no FRA by consulting the Social Security website. FRA elected official wants to touch it. is an increasingly important concept for people to understand now that many are continuing to work And, as long as the system exists, you must know later in life. the rules to get the most out of it. To Get The Most Out Of Your Social Security, You Must Know the Rules