Are you making the right Social Security choices for you?
October 21, 2013
by Brian Wolf

One of the things that people have been worrying about for a long time is their Social Security checks. And it certainly doesn’t help to have our government so far in debt that they actually might start defaulting on their obligations. Although, the good news is that the Social Security program is probably the most sacred of all programs and current retirees will most likely see very little, if any, changes to their programs.

So, if you are nearing retirement, you will have many things to consider when it comes to your Social Security benefits. Very few people know all the ins and outs of the complicated social security system.

Forbes came out with a list of 44 Social Security “secrets”, and you can view them on the following link.


I’ll outline a few of these little-known facts in the rest of the column.

Social Security’s Handbook has 2,728 separate rules governing its benefits. And it has thousands upon thousands of explanations of those rules in its Program Operating Manual System, called the POMS, which provides guidance on implementing the 2,728 rules. Talk about a user’s nightmare!

Taking the right Social Security benefits at the right time can make a huge difference to a retiree’s living standard.

Unfortunately, Social Security has some very nasty “gottcha” provisions, so if you take the wrong benefits at the wrong time, you can end up getting the wrong, as in smaller, benefits forever.

Also, the folks at the local Social Security offices routinely tell people things that aren’t correct about what benefits they can and can’t receive and when they can receive them. Taking Social Security benefits – the right ones at the right time – is one of the biggest financial decisions you’ll ever make, so you need to get it right.

• If you are already collecting your retirement benefit and are at or over full retirement age, you can tell Social Security you want to suspend further benefits and then ask them to restart your benefits at a later date, say age 70.

• If you aren’t now collecting, and wait until 70 to collect your retirement benefit, your retirement benefit starting at 70 can be as much as 76 percent higher than your age-62 retirement benefit, adjusted for inflation.

• If you are married or divorced, waiting to collect your retirement benefit may be the wrong move. If you are the low-earning spouse, it may be better to take your retirement benefit starting at age 62 and then switch to the spousal benefit you can collect on your current or ex-spouse’s account starting at your full retirement age.

• If you’re married, you or your spouse, but not both, can receive spousal benefits after reaching full retirement age while deferring taking your retirement benefits and, thereby, letting them grow.

• On its website, Social Security states, “your spouse can receive a benefit equal to one-half of your full retirement benefit amount if they start receiving benefits at their full retirement age.” This is true only if your spouse isn’t collecting his/her own retirement benefit. If your spouse is collecting her own retirement benefit, his/her spousal benefit is calculated differently.

There are two different formulas for spousal benefits, depending on whether the spouse is collecting his/her own retirement benefit.

• There is no advantage to waiting to start collecting spousal benefits after you reach your full retirement age.

• There is no advantage to waiting to start collecting survivor benefits after you reach your full retirement age.

• Millions of Baby Boomers can significantly raise their retirement benefits by continuing to work in their 60s. This may also significantly raise the spousal, child, and mother and father benefits their relatives collect.

• When it comes to possibly paying federal income taxes on your Social Security benefits, withdrawals from Roth IRAs aren’t counted, but withdrawals from 401(k), 403(b), regular IRAs, and other tax-deferred accounts are.

When it comes to understanding your Social Security benefits, I have only just begun to scratch the surface of a very complex program. Needless to say, you probably should be consulting with an expert in this field before you lock in any of your choices.

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