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Maximize Your Social Security GETTING THE MOST FROM THOUSANDS OF OPTIONS.

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Presentation on theme: "Maximize Your Social Security GETTING THE MOST FROM THOUSANDS OF OPTIONS."— Presentation transcript:

1 Maximize Your Social Security GETTING THE MOST FROM THOUSANDS OF OPTIONS

2 Maximize My Social Security and other products provided by Economic Security Planning, Inc. at and are educational calculators designed to give you or your clients some input in mapping out your financial future, but should not be acted upon as a complete financial plan. Maximize My Social Security and its derivative products' creators are not certified, registered, authorized, or any other type of financial planners. Maximize My Social Security and its derivative products are simply tools for helping you think through your economic futures and those of your clients. Their "suggestions" should be viewed as informative inputs into personal financial decision-making. Maximize My Social Security and its derivative products provide neither economic, financial, nor tax advice, which can only be delivered by authorized professionals. The Social Security benefit suggestions/estimates produced by Maximize My Social Security are just that – suggestions and estimates. Only the Social Security Administration can specify precisely the benefits to which anyone will be eligible and the amounts anyone will receive. The estimates provided here may differ from the correct amounts due to mistakes in our computer code of which we are unaware or because of legislated changes in Social Security provisions of which we are unaware or because of delays in our updating our computer code for mistakes in our computer code or for changes in Social Security provisions. Disclaimer

3 Social Security may be your largest asset Social Security may be your largest asset Social Security is immensely complex Making the right choices can mean Tens to hundreds of thousands of $$$

4 You paid your SS taxes. Time to get what’s yours! Time to get what’s yours! We can help find your best SS strategy. We can help find your best SS strategy.

5 Co-ranked #1 SS tool by The Wall Street Journal Co-ranked #1 SS tool by The Wall Street Journal Developed by Boston University renown economist Laurence Kotlikoff Developed by Boston University renown economist Laurence Kotlikoff MMSS considers thousands of collection strategies MMSS considers thousands of collection strategies MMSS finds the strategy that maximize your lifetime benefits MMSS finds the strategy that maximize your lifetime benefits We can compare MMSS’ top strategy with any other options We can compare MMSS’ top strategy with any other options We Use Maximize My Social Security (MMSS)

6 Laurence Kotlikoff, PhD Laurence Kotlikoff, PhD William Fairfield Warren Professor of Economics, Boston University William Fairfield Warren Professor of Economics, Boston University Fellow, American Academy of Arts and Sciences Fellow, American Academy of Arts and Sciences One of our nation’s leading experts in personal financial planning One of our nation’s leading experts in personal financial planning Social Security columnist for PBS NEWSHOUR Social Security columnist for PBS NEWSHOUR Writes for The NY Times, The Wall Street Journal, The Financial Times, Forbes, PBS NEWSHOUR, Time Magazine, Bloomberg, Huffington Post, Yahoo,... Writes for The NY Times, The Wall Street Journal, The Financial Times, Forbes, PBS NEWSHOUR, Time Magazine, Bloomberg, Huffington Post, Yahoo,...

7 Every household is different. But each needs Social Security advice – the best advice. Every household is different. But each needs Social Security advice – the best advice.

8 MMSS considers all types of households. MMSS considers all types of households. Married Married Divorced Divorced Widowed Widowed Single Single Partnered Partnered With minor and/or disabled children With minor and/or disabled children

9 MMSS consider all major SS insurance benefits Retirement Retirement Spouse’s Spouse’s Divorced Spouse’s Divorced Spouse’s Child In-Care Spouse’s Child In-Care Spouse’s Widow(er)’s Widow(er)’s Divorced Widow(er)’s Divorced Widow(er)’s Child’s Child’s Disabled Child’s Disabled Child’s Surviving Child’s Surviving Child’s Father’s and Mother’s Father’s and Mother’s

10 MMSS considers all Social Security provisions Recomputation of benefits Recomputation of benefits Earnings Test Earnings Test Family benefit maximum Family benefit maximum Windfall Elimination Provision Windfall Elimination Provision Government Pension Offset Government Pension Offset Restricted application Restricted application Deeming rules Deeming rules Adjustment of reduction factor Adjustment of reduction factor RIB LIM RIB LIM Alternate widow(er)’s benefit calculation Alternate widow(er)’s benefit calculation

11 1.Be patient – wait to take higher benefits 2.Try to take all benefits you can 3.Time your benefit collection Three General Rules to Maximize Your SS

12 Delay benefit collection Delay benefit collection Collect one benefit early while letting another benefit grow Collect one benefit early while letting another benefit grow File and suspend to get lump sum option File and suspend to get lump sum option File and suspend to activate spousal benefit for spouse File and suspend to activate spousal benefit for spouse Suspend retirement benefit after FRA and restart at 70 Suspend retirement benefit after FRA and restart at 70 Start/stop/start retirement benefit to activate spousal benefit for spouse Start/stop/start retirement benefit to activate spousal benefit for spouse Retire early to activate child and child-in-care spousal benefits Retire early to activate child and child-in-care spousal benefits Take widow benefit before retirement benefit Take widow benefit before retirement benefit Take retirement benefit before widow(er) benefit Take retirement benefit before widow(er) benefit Strategies to Follow the Three Rules Strategies to Follow the Three Rules

13 Delay Benefit Collection Retirement benefits at 70 are now 76% larger benefits than at 62 Retirement benefits at 70 are now 76% larger benefits than at 62 Spousal benefit at 66 are now 43% larger than at 62 Spousal benefit at 66 are now 43% larger than at 62 Widow(er) benefit at 66 are now 40% larger than at 60 Widow(er) benefit at 66 are now 40% larger than at 60

14 Collect One Benefit While Other Benefit Grows Examples Take spousal benefit at FRA and retirement benefit at 70 Take spousal benefit at FRA and retirement benefit at 70 Take divorcee spousal benefit at FRA and retirement benefit at 70 Take divorcee spousal benefit at FRA and retirement benefit at 70 Take retirement benefit before FRA and then widow(er) benefit at or before FRA Take retirement benefit before FRA and then widow(er) benefit at or before FRA

15 File and Suspend Strategy Higher earner files for retirement benefits at FRA & immediately suspends receipt of benefits till 70 to maximize benefits Higher earner files for retirement benefits at FRA & immediately suspends receipt of benefits till 70 to maximize benefits Lower earning spouse claims full spousal benefits on higher earner’s record Lower earning spouse claims full spousal benefits on higher earner’s record Lower earner accrues potentially significant increases to future retirement benefits Lower earner accrues potentially significant increases to future retirement benefits If higher earner is younger, it may be better for higher earner to collect spousal benefits If higher earner is younger, it may be better for higher earner to collect spousal benefits

16 File and Suspend to Get Lump Sum Option Even never married singles should file and suspend at FRA Even never married singles should file and suspend at FRA Their retirement benefit will continue to grow Their retirement benefit will continue to grow But they can request all suspended benefits in a lump sum if needed But they can request all suspended benefits in a lump sum if needed But taking suspended benefit in lump sum forfeits Delayed Retirement Credits But taking suspended benefit in lump sum forfeits Delayed Retirement Credits

17 Start/Stop/Start strategy If you already started collecting retirement benefits before your FRA, it might be beneficial to suspend them at FRA so you can earn increases up to age 70 If you already started collecting retirement benefits before your FRA, it might be beneficial to suspend them at FRA so you can earn increases up to age 70 The longer you can suspend after FRA, the more your benefit increases, recovering reductions due to early receipt The longer you can suspend after FRA, the more your benefit increases, recovering reductions due to early receipt Early retirement at 62 = 75% of benefit at FRA Early retirement at 62 = 75% of benefit at FRA 8% increase per year of suspension after FRA, up to 32% 8% increase per year of suspension after FRA, up to 32% 132% * 75% = 99% of benefit at FRA 132% * 75% = 99% of benefit at FRA

18 Suspend Retirement Benefit at/after FRA and Restart at 70 If you regret taking your retirement benefit early, … If you regret taking your retirement benefit early, … You can suspend it at/after FRA and restart at 70 at a 32% higher real value You can suspend it at/after FRA and restart at 70 at a 32% higher real value

19 File for Your Retirement Benefit to Activate Children’s Child-In-Care Spousal Benefits You must file for retirement benefits to enable child’s benefits and child in care spousal benefits on your record You must file for retirement benefits to enable child’s benefits and child in care spousal benefits on your record In some cases, it will be beneficial to claim early reduced retirement benefits in order to enable these benefits In some cases, it will be beneficial to claim early reduced retirement benefits in order to enable these benefits Then, once you reach FRA, you suspend receipt of retirement benefits and begin recouping part of, and in some cases potentially nearly all, the early retirement reduction by continuing to suspend receipt up to age 70 Then, once you reach FRA, you suspend receipt of retirement benefits and begin recouping part of, and in some cases potentially nearly all, the early retirement reduction by continuing to suspend receipt up to age 70 If you are already receiving retirement benefits we tell you if this strategy will result in increased lifetime benefits based on the data you provide If you are already receiving retirement benefits we tell you if this strategy will result in increased lifetime benefits based on the data you provide

20 Take Retirement Benefit Before Widow(er) Benefit It may be best for a widow(er) to take retirement benefit early and It may be best for a widow(er) to take retirement benefit early and Then take widow(er) benefit at or before FRA Then take widow(er) benefit at or before FRA If decease spouse took retirement benefit early, widow(er) benefit is subject to RIBLIM and may not grow after a given age before FRA If decease spouse took retirement benefit early, widow(er) benefit is subject to RIBLIM and may not grow after a given age before FRA Widow(er)’s benefit is limited to the higher of 82.5% of deceased spouse’s full retirement benefit (PIA) or the amount deceased spouse was collecting at time of death. This is the RIBLIM formula. Widow(er)’s benefit is limited to the higher of 82.5% of deceased spouse’s full retirement benefit (PIA) or the amount deceased spouse was collecting at time of death. This is the RIBLIM formula. If widow(er)’s benefit is limited, it can be advantageous to take reduced widow(er)’s benefit as many as 51 months before FRA If widow(er)’s benefit is limited, it can be advantageous to take reduced widow(er)’s benefit as many as 51 months before FRA

21 Take Widow(er) Benefit Before Retirement Benefit It may be best for a widow(er) to take widow(er) benefit early It may be best for a widow(er) to take widow(er) benefit early Take retirement benefit at 70 at its largest possible value Take retirement benefit at 70 at its largest possible value

22 1.Take two benefits at once, you get, roughly speaking, just the largest 2.Before FRA, deeming can force you to take spousal & retirement benefits at once 3.Family benefit maximum limits auxiliary benefits 4.Allowable collection dates of spouses are interdependent 5.Taking retirement benefit early reduce widow(er) benefit 6.Only one spouse (but both exs) can get full spousal benefit Some Big Social Security’s Gotchas


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