Your Spouse’s Retirement & Social Security

Let’s assume for a moment that you are now gone and your surviving spouse must account for all the income she will receive.  A common mistake today is if you just assume that your surviving spouse will continue to receive “both” Social Security checks just like during your retirement.  However, this is not correct.  Your spouse will only receive “one” check from Social Security.  In other words, the total Social Security income will be reduced and a good rule of thumb is that your spouse can receive the larger check the two of you had been receiving.

Don’t make this Social Security mistake!

One of the best financial planning strategies for Social Security is lost if the husband and/or wife begins taking benefits before their “full retirement age”.  Please seek competent professional advice before you or someone you know starts drawing Social Security.  There could be strategies available that benefit you if you will stop and consider them “prior to” filing your application…

When to start Social Security

This is a question many people are struggling with today.   And in terms of making the key decision, surveys show many Americans today don’t understand their alternatives.  We are finding the smartest path to take depends on many factors.  One of the key factors is marital status.  Another key factor is one’s age.  But when it comes to a retiree making their Social Security decision, several issues make the decision complicated.  For instance, quoting T. Rowe Price research, “Retirees have two competing goals: maximizing Social Security benefits, which means delaying benefits to age 70, and minimizing savings withdrawals in the early years of retirement, which means taking benefits as early as possible.”

In short, we strongly suggest retirees get professional help before they make their choice.  More specifically–a married couple should seek professional help before the spouse, who has been the “lower wage earner”, starts their Social Security benefits.

Are you maximizing your income?

In May we blogged about your retirement income stream, specifically the potential benefits of delaying your Social Security if you are able to do so.  Did you also know that your Social Security is permanently reduced if you claim your benefits early?  Remember, it is important to maximize any source of income during retirement.  This includes Social Security, as well as other potential income streams like pensions and annuities.

For those who are willing to wait, or who can work a little longer, there are additional strategies you can consider in order to “maximize” the benefits you receive from Social Security.  To help determine this, there are three key factors to consider:  1) how long you are planning to work, 2) your marital status and age differences, and 3) your health and family medical history.  By sorting through these key points and working with a professional, you should be able to determine if strategies such as “file & suspend”, “switch strategies”, or “filing a restricted application” can benefit you by increasing the amount you receive over your lifetime.  The benefits can be significant.

Your Retirement Income Stream

According to retirement studies conducted by J.P. Morgan, two-thirds of the average American’s retirement income comes from their Social Security and their earnings.  And many of these people find themselves having to work longer and retire later.  And remember, Social Security benefits only replace 27% of higher incomes (past wages of at least $113,700) and up to 58% of lower incomes (past wages of $20,172) of one’s past wages (Source: 2013 Annual Report of the Board of Trustees of the Federal Old-Age and Survivors Insurance Trust Fund).

One simple way for a 60-year old pre-retiree to improve their situation is to delay starting their Social Security income.  According to The Social Security Administration each year you wait to draw Social Security you gain an increase of approximately 7%, much like receiving a “raise” in your retirement pay check.  And though a few can’t delay, we have found with some adjustments many can wait to begin this benefit until at least their full-retirement age (age 66 if you were born between 1943–1954).  This may be a particularly important consideration if a spouse has “good genes” and stands a reasonable chance of living into their 90’s.

To possibly help, remember that the Social Security Administration now provides access to online benefit calculators through their website, www.ssa.gov.