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Soc sec claiming strategies

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  • 1. Creative Social Security Claiming Strategies: Understandingthe NuancesLarry R. Frank Sr, MBA, CFP®Registered Investment Adviser (California)Better Financial Education300 Harding Blvd Suite 103DRoseville, CA 95678916-303-7777LarryFrankSr@BetterFinancialEducation.comwww.BetterFinancialEducation.comBy Elaine Floyd, CFP®With more people learning about file-and-suspend and claim-now-claim-more-later, mistakes are being made – like trying to do certainthings before full retirement age. Make sure you understand therules before going down to your Social Security office.The Senior Citizens’ Freedom to Work Act of 2000 to your individual situation. One or the other (orushered in some subtle rules that baby boomers both) may be available to you, but it is critical to getare now taking advantage of to receive a little extra the timing just right.income from Social Security. Here are corrections to some commonOne strategy is file-and-suspend, where the misunderstandings.higher-earning spouse files for Social Securityupon reaching full retirement age in order to You can’t claim a spousal benefit until yourentitle his spouse to her spousal benefit, and then spouse has filed for his or her benefit. Thisimmediately suspends his benefit in order to earn is a basic rule. Any spousal strategy, whetherdelayed credits to age 70. traditional or innovative, requires that the spouse on whose record the spousal benefit is based applyThe other strategy is claim-now-claim-more-later. for his own benefit first. This means the spouseThis strategy turns the traditional way of claiming must sometimes wait. If Jack is only 64 when Jillspousal benefits on its head by having the high- wants to file for her spousal benefit, and if Jackearning spouse claim HIS spousal benefit off the wants to delay filing in order to earn maximumlow-earning spouse’s earnings record from age 66 to delayed credits, Jill has no choice but to wait until70 while his own benefit builds delayed credits. Jack is ready to file before starting her spousal benefit. However, she need not wait until Jack isWhile these strategies are simple in theory, it is 70. As soon as Jack turns full retirement age, heimportant to understand the nuances as they apply may file and suspend.Copyright © 2011 by Horsesmouth, LLC. All Rights Reserved.License #: 4159247-248703 Reprint Licensee: Larry R. Frank SrIMPORTANT NOTICE This reprint is provided exclusively for use by the licensee, including for client education, andis subject to applicable copyright laws. Unauthorized use, reproduction or distribution of this material is a violation |1of federal law and punishable by civil and criminal penalty. This material is furnished “as is” without warranty of anykind. Its accuracy and completeness is not guaranteed and all warranties express or implied are hereby excluded.
  • 2. You must be over full retirement age to file and Both spouses cannot claim a spousal benefit offsuspend. Anyone can file for Social Security at 62, the other’s record at the same time. Here’s a caseof course. But to voluntarily suspend your benefit in of people taking creative claiming strategies a steporder to earn delayed credits, you must be over full too far. If Jack can claim spousal benefits off Jill’sretirement age – currently age 66 for people born record, why can’t Jill also claim spousal benefitsbetween 1943 and 1954. Many people want to file- off Jack’s record while they each earn delayedand-suspend as soon as they turn 62. Can’t do it. credits to age 70? The answer is that in order for Jack to claim a spousal benefit off Jill’s record,You must be over full retirement age to receive Jill must file for her own benefit. Remember, thisa spousal benefit if your own benefit is higher. is a basic rule for spousal benefits: the spouse onAgain, many people think they can claim-now- whose record the spousal benefit is being paidclaim-more-later as soon as they become eligible for must have filed for benefits. Once Jill files for herSocial Security at 62. So they go into their SSA office own benefit, she can’t restrict her application tosaying they just want to receive their spousal benefit her spousal benefit. If both spouses have relativelywhile their own benefit builds delayed credits. Then high earnings records, the solution is for Jill to filethey are surprised when the SSA worker tells them and suspend while Jack restricts his applicationthat they have to take their own benefit because it to his spousal benefit. Or vice versa. An importantis higher. Under the deemed filing rule, anyone who purpose of the Savvy Social Security Spousalapplies for Social Security before full retirement age Planning Calculator is to help married couplesis deemed to be filing for both the earned benefit decide which spouse should claim the spousaland the spousal benefit; you don’t have a choice. benefit and when.After full retirement age you do. Maximizing spousal benefits through innovativeTo receive a spousal benefit when your own claiming strategies can help baby boomers gain anbenefit is higher, you must restrict the scope edge in retirement planning. Just make sure youof your application to your spousal benefit. understand the rules.Sometimes people correctly wait until they turnfull retirement age to claim their spousal benefit Elaine Floyd, CFP®, is the Director of Retirementand are still turned away by an SSA worker who and Life Planning, Horsesmouth, LLC., where shesays they can’t do it because their own benefit is focuses on helping people understand the practicalhigher. In this case, the applicant did not issue the and technical aspects of retirement income planning.correct instructions. If you are over full retirement Horsesmouth is an independent organizationage and want to receive a spousal benefit while providing unique, unbiased insight into the mostyour own benefit builds delayed credits, you must critical issues facing financial advisors and theirsay to the worker, “I’d like to restrict the scope of clients. Horsesmouth was founded in 1996 and ismy application to my spousal benefit.” If you say located in New York City.these words, the worker will not even look at yourown benefit and will be obligated to start yourspousal benefit.Please refer to the "Disclosure Stuff" page on website: www.BetterFinancialEducation.com2|

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