Did you know:
- There are 567 ways to claim your Social Security – which one is right for you?
- If you make a wrong choice, you could miss out on thousands of dollars in income over your lifetime.
- Many make mistakes when claiming Social Security that can reduce benefits by as much as 70% or more.
- Social Security employees cannot advise you on how to maximize your benefit.
- After 12 months, there is no do-over, your decision is permanent.
Since there are over 567 ways to claim Social Security, it is not a matter of just signing up. Choosing how and when to receive your benefits is an involved task, and for many it might be one of the most important decisions you will make in retirement.
A couple years ago, I gained access to a very sophisticated Social Security Calculator which will analyze all 567 ways to claim against your personal situation. I was in the process of learning how to use this new tool when one evening as I was sitting on the back deck with my neighbor Floyd, I asked him if I could try the calculator out on him and his wife. He was 63, his wife 68 and both had already filed for and were currently receiving benefits. Floyd was retired and the principal bread winner, his wife Lucy had not earned an income in over 30 years.
“I’m new at this, so I don’t know what results will be gained, but we have nothing to lose by trying,” I told Floyd.
The next day Floyd came to my office with his Social Security printouts and we entered his information into the calculator. Lucy had been receiving her benefit for several years, so there was no do over for her, but Floyd had pulled the trigger on his benefits in the last 6 months, so he was still within his one year window of re-filing if necessary. Both had simply gone down to the local SS office in Nashville and simply signed up for their benefit. Was there anything they missed? Well, the printout that the calculator yielded was quite impressive. One item in their “signing up” process that they overlooked was a spousal benefit for Lucy. This was worth $300 a month or $3600 per year. Upon learning of this oversight, Floyd and Lucy scheduled another visit to the SS office and took the printout with them. The SS employee said, “Yes you are entitled to the spousal benefit, we sent you a letter some time back informing you of this.”
Now I know Floyd fairly well, and if someone sent him a letter that said he was due money, he would not have missed, forgotten or ignored it, especially if it was money from the government that he was owed. He was adamant that no such letter had ever landed in his mailbox.
Not only did their SS benefit get increased by $300 per month, they backdated the change by 10 months and issued a first payment of $3,000. What a nice little windfall. As the saying goes, “sometimes you’re the windshield and sometimes you’re the bug.”
My view on SS is that it is a program that we as Americans fund directly with our hard earned money. This is not a government handout. It’s part of our retirement strategy and it’s self-funded. We’ll have to put aside for a moment the breathtaking mismanagement by our government, so much so that the SS trust fund is projected to run short of money by 2033. Just remember that for now, if you have money coming already or if you are at least 55 and will file in the next 10 years or so, you are going to get paid in full and you should make sure you get as much as you are legally entitled to. For those of us that are younger, we should still expect to collect our Social Security, but I predict changes to retirement age, taxation and cost of living increases among other things will be considered by the powers that be in Washington D.C.
So if you are near retirement age or close to it, put some time and effort into understanding the best time for you to claim your Social Security. Many factors such as whether you are still working, yours and your spouse’s age and earning history, current life expectancy, as well as other income sources will influence when you should start getting paid.
I know if feels tempting, a check you’ve never been getting before is now available. You want to get while the getting is good, I’m sure. But filing too early or without enough information on available strategies, can result in a mistake that can add up to many thousands of $$ over 10, 20 or even 30 years.
For starters, email me at rick@dixonadvisorygroup.com, and ask for a copy of our two page Social Security Guide.