Social Security Strategies and Tips for Today
Social Security benefits can be a boost to post-retirement income, but they can also be challenging to navigate. When and how you claim Social Security benefits can significantly change the amount you receive. Add to that the employment uncertainty that many people near retirement are feeling today and Social Security decisions can become quite complex.
There’s no wrong decision about when to take Social Security benefits as long as your choice is deliberate and strategic. Talking with an advisor and considering Social Security as part of your overall plan can help you make the right choices for your situation and keep your future on track. Here are five things to consider:
Wait as long as possible to claim Social Security.
For each year you delay claiming your benefits, from age 62 to 70 (the age by which you must claim), your benefit increases by 8%, meaning you will receive 64% more each month if you can wait all eight years. Delaying your claim has a big impact. By accessing other funds in the first few years of retirement, or taking on part-time work, you can take full advantage of your Social Security benefits.
Factor it into your comprehensive plan and ask questions.
Some advisors don’t want to give Social Security advice and some individuals don’t want to factor it into their retirement. But we believe it’s important to calculate the impact on your overall plan. Coordinate when and how to claim Social Security with your other assets, work plans, anticipated expenses, and inheritance plans. Social Security Administration advisors are a great resource.
Understand spousal benefits.
Married people can claim Social Security benefits based on the earning history of the better-compensated spouse and age differences in spouses can affect when it is best to claim the benefits. Divorcees may be able to file based on the earnings of their former spouse if they were married at least 10 years, even if the former spouse has remarried (but not if the claimant has). There are a lot of variables to these rules, so talk to an expert.
You may be able to claim and then repay or pause benefits
Some lesser-known rules of Social Security allow people to claim their benefit, and then change their mind if they don’t need it yet. To completely undo a claim, any payments made must be repaid within a certain time. After that time, a beneficiary may pause payments, but won’t be able to re-file at an older age. In uncertain times, this flexibility can be useful.
This is a safety net, so use it if you need it
There are many ways to optimize Social Security but never forget it exists specifically to enhance financial security for retirees. If an early payout is the best way to ensure your well-being and quality of life, then that’s what you should do.
If you are nearing retirement age or in the process of retirement planning, come talk to an Alerus advisor for help strategizing the best use for your Social Security benefits. We can help you make the best possible choices for your overall situation and figure out how to turn the many rules of Social Security to your advantage. Even if your plans are evolving, we’ll help your financial plans evolve to keep up.