By Michael Donahoe
A lot of pieces must fit together to achieve a comfortable retirement, and an important piece of that puzzle is Social Security. Even if you won’t be relying on it to pay the bills during your golden years (thanks to your nest egg), don’t overlook Social Security. After all, those benefits are rightfully yours and taking the time to optimize them for your unique situation will be beneficial.
For the Single Women
Many women make the mistake of claiming Social Security as soon as they’re eligible. Few wait until full retirement age, and even fewer wait until age 70. But your benefit amount increases by 8% each year from 66 to 70, plus cost of living increases for inflation, so it pays to wait. (1)
For example, let’s say your full retirement age is 66 and your monthly payment is estimated to be $2,000. The chart below shows how much you’d get every month if you started collecting at age 62 (reduced benefits), 66 (full benefits), and 70 (increased benefits).
Just by waiting until age 70, your monthly payout increases by 32% each month, which could lead to thousands of more dollars throughout your retirement. (2)
But when you should claim benefits isn’t as simple as waiting until age 70. Your health, home, and personal circumstances could indicate otherwise. Maybe you find out you have advanced-stage breast cancer, so you start taking benefits at age 62. Or maybe you are in good health and have plenty of other resources, so you use other accounts to fund retirement while you wait until age 70. Tailoring your claiming strategy to your unique life circumstances is key, and a professional can help you take all factors into account.
For Those Who Are Divorced
This may come as a surprise, but divorcées can claim their ex-spouse’s benefits as long as they were married for at least 10 years. The amount you receive is equal to 50% of your ex’s benefits. If you qualify for your own benefits, you either receive 100% of your benefit amount or 50% of your ex’s, whichever is higher. (3)
If your ex passes away, you receive benefits as a widow, which means you get 100% of your ex’s payout. The best part? Your ex never has to know you’re collecting spousal benefits. Social Security doesn’t notify them and you’re not required to reach out. There is one caveat to this rule, however. You won’t qualify for spousal benefits if you remarry. Your ex can, but you can’t. Although, if you happen to remarry and your second marriage ends in divorce or your spouse dies, you’d once again be eligible for your first spouse’s benefits.
For the Widows
Widows and divorcées who were married for at least a decade are eligible for survivor benefits when a spouse dies. Just keep in mind that you won’t qualify for survivor benefits if you remarry before age 60.
As with regular Social Security payouts, you receive reduced benefits if you claim them before you reach full retirement age. But unlike regular payouts, you don’t have to wait until you’re 70 to get the highest amount.
The chart below shows what percentage of survivor benefits you’d get based on your situation: (4)
Meet With a Financial Professional
Putting together an intricate puzzle with many pieces is always easier with help; and attempting to navigate Social Security alone may not be the best course of action. To gain clarity and help maximize your benefits, it’s best to work with a financial professional.
Our team at Harvest Asset Group is here to help you make sense of Social Security, evaluating your options and choosing a claiming strategy based on your unique situation. If you have questions about Social Security or you need help developing a big-picture financial plan, call us at (207) 775-1151 or email us at info@harvestassetgroup.com to find out if we’d be a good fit for you. For immediate access to our best financial insights and tips, sign up for our valued-packed newsletter here.
About Michael
Michael Donahoe is the founder and principal of Harvest Asset Group, LLC, an independent, fee-only financial planning and investment management advisory firm in Portland, Maine. Michael enjoyed a successful corporate career in marketing and sales before transitioning to the financial planning profession, founding his firm in 2012, where he now leads the client services team and serves as the firm’s chief compliance officer. Michael earned his MBA degree from George Washington University and completed his educational requirements to earn the CFP® mark of distinction at the University of California, Berkeley. He is a Fee-Only and NAPFA registered financial advisor, a designation which followed the completion of rigorous continuing education requirements. Michael has lived in the Portland area since relocating from San Francisco in 1995 to be closer to family. He is active in community affairs and spends his non-working time enjoying the natural beauty of Maine.
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(1) https://www.ssa.gov/benefits/retirement/planner/delayret.html
