Tag Archives: social security benefits

Social Security: Stronger Than Most Realize

Social Security cardMy Comments: This article was directed at advisors who provide financial advice to those who are starting to take their Social Security benefits. This includes me, both as an advisor and recipient of benefits.

I’ve long maintained that periodic tweaking of the rules, similar to what has happened in the past, will serve to make the system viable for years and years. Mankind has evolved over the millennia, as has society and the rules we select to govern ourselves. I believe the benefits of this program far outweigh its costs. Assuming a rational (and elderly) electorate, it will continue to be viable without major changes.

by Dave Lindorff / APR 29, 2015

When one advisor told her client that she may have to work longer than she intended, at a job that she really didn’t like, the client was dismayed. She knew she had meager savings stashed away in an IRA, but she had been counting on her Social Security benefits to make up the shortfall. “My advisor told me that it’s possible that when I’m in my 80s, Social Security might only be able to pay 75% of the benefits I’m expecting to get,” she explains.

News stories predicting the demise of Social Security, or that the program’s $2.6 trillion trust fund will run out in 2033 are legion. Advisors often warn their clients that they shouldn’t count on anticipated Social Security benefits as part of their retirement package.

But there are also experts who say that rumors of the program’s death have been greatly exaggerated. They argue that Social Security, a program that began back in 1935, and that has never missed a payment, is unlikely to be left short of funds by Congress. In fact, the same boomers who are seen as taxing the system’s ability to pay are the very ones who will make the already influential senior lobby about 50% larger and significantly bigger as a share of the total electorate in 15 years. That suggests Social Security will have an increasingly powerful lobby working on its behalf as time goes by.

If advisors genuinely doubt Social Security’s ability to pay promised benefits, they should be discounting those benefits in recommending savings and investment programs to clients. But if they’re wrong to worry, and Social Security is actually a sound bet, such a conservative strategy could be encouraging clients to save more than they need or work longer than they have to.

Jim Holtzman, an advisor with the Legacy Group in Pittsburgh, says while benefits are probably secure for people already retired or nearing retirement, he is concerned that Congress might not fix the projected shortfall that would hit in 2033, when without any fix, the program would only be able to pay 77% of promised benefits. Another worry? That politicians might fix things by reducing benefits for future retirees who are younger. “We typically factor in only 50% of estimated Social Security benefits for our younger clients because of that uncertainty,” he says, “and some of them tell us we should just leave Social Security out all together.”

That’s taking a lot of money off the table when planning for most people’s retirement needs. The average Social Security benefit in 2015 is $1,218 per month, or $14,616 per year; $29,232 per year for couples.

A LITTLE TWEAKING
Michael Kitces, a partner and director of research at Pinnacle Advisory Group in Columbus, Md., says, “The idea of telling people of any age that Social Security won’t be around for them when they retire is [very misguided]. And even the idea that benefits are going to be cut when the trust fund is run out is absurd. It’s not a political reality. Just a 3% increase in the payroll tax—1.5% for employees and 1.5% for employers—fixes the system for the next 100 years.”

LEARNING FROM THE PAST
Problems with Social Security in the past were even more drastic yet were fixed in time, notes Rob Kron, head of retirement education at BlackRock.

“In 1983, Social Security’s funding was up against a wall. It was within a year of running out of money, which would have meant benefits would have to be paid just from the money coming in from the payroll tax of current workers.” President Reagan and Congress fixed things by gradually raising the full retirement age from 65 to 66 and eventually, for those born after 1960, to 67, and by increasing the payroll tax in steps.

Kron adds, “I’m confident Congress will eventually do something this time too. I certainly wouldn’t tell anyone to count on a reduction of benefits in 2033, but I encourage young clients to focus not on Social Security, but on saving.”

Peter Diamond, emeritus professor at MIT and Nobel laureate in economics, has, together with a colleague, Peter Orszag, vice chairman of corporate and investment banking and chairman of the Financial Strategy and Solutions Group at Citi, and former head of President Obama’s Office of Management and Budget, assembled a list of ways that Congress could fix Social Security.

Diamond acknowledges the system does need some Congressional tinkering, but says a solution needn’t be that costly or disruptive. Among the suggestions the two have made:
• Raising the FICA tax by 1.2% on employers and employees each, a small bump which would fully fund Social Security for the next 75 years.
• Raising or eliminating the cap on income subject to the payroll tax—currently set at $118,500 and adjusted annually.
• Raising the full retirement age slightly to account for increases in longevity.
• Lowering benefits slightly for wealthier Americans.

The important thing is that the sooner Congress acts, the smaller the fixes have to be, since there is a longer time for those fixes to rebuild the trust fund, says Diamond. Diamond notes that Social Security, since its inception in the New Deal, has “always operated in crisis mode.” He explains, “When Social Security was created, Republicans were heavily opposed. When President Clinton proposed putting some trust fund monies into an index fund, Alan Greenspan said it ‘threatened our freedom.’ So whatever we do with Social Security will be the usual compromise between what people want as beneficiaries, and those who are ideologically opposed to the program.” But he adds, “No politician will say they are in favor of cutting Social Security benefits for anyone.”

In terms of how advisors should deal with the issue of Social Security’s future benefits, he says, “Anyone who would significantly discount the value of estimated Social Security benefits or count them as zero is misguided. If you’re going to make predictions about a client’s portfolio, the stock and bond markets dwarf any risk concerns about Social Security benefits. And it’s not as if your 401(k) or your IRA are totally reliable either.”

Stephen Goff, chief actuary at the Social Security Administration, notes that company pensions are almost gone, and personal savings have also taken a hit this century, with a “lost decade” in 2000-2010 for stocks, and a decline in home equity values. That makes Social Security more critical for the nation’s elderly and disabled.

THE BEST ROI
Social Security is secure enough that, far from discounting future benefits, Alicia Munnell, director of Boston College’s Center for Retirement Research, argues that advisors should recommend to any clients who are feeling financially strapped and thinking of taking their benefits early, to draw on other investments, even 401(k) or IRA funds, and wait until 70 to get the maximum benefit.

Kitces agrees, saying that simply waiting until 70 to collect can be “the best long-term return money can buy.” Indeed, for an average middle-class person age 66 with $1,800 monthly Social Security benefit, matching that with a privately issued annuity that has an inflation adjustment and spousal benefit, according to Fidelity Investment’s online annuity calculator, would cost $500,000.

As BlackRock’s Kron notes, to the extent that Social Security benefits can cover a client’s or couple’s expenses, they are free to take more risk with their invested assets.

QLACs Change the Game in Social Security Timing

income taxMy Comments: If you know about Social Security plannning, as I claim to do, the prevailing wisdom is to delay taking your benefits for as long as possible. The argument is that each year you wait, you increase the size of your payments by 8%, even before the expected annual increase due to inflation.

What is often overlooked here is that your life is finite, just unknown. Waiting a year means you may ultimately leave some of your Social Security money behind. It only works if you live beyond your expected lifetime. The second overlooked variable is that you may be sick and tired of working and simply want to do something else, while you still can.

Introducing a QLAC into the planning allows you to take your SSA benfits sooner and use deferred taxes to offset the lower payments in later years, assuming you are still alive.

By Robert Bloink, and William H. Byrnes February 24, 2015

Qualified longevity annuity contracts (QLACs) have, in theory, existed for nearly three years, but it’s only in recent months that insurance carriers have begun to offer these products—finally making the QLAC a realistic planning option.

While the purpose behind the QLAC is relatively simple—providing income guarantees late in a client’s life—in reality, this new planning vehicle can reshape the client’s entire retirement income planning strategy. QLACs won’t replace Social Security as the primary source of retirement income for many clients but, for the higher income client, the introduction of QLACs into the planning mix can drastically alter even the most basic Social Security strategies—including the typical plan for maximizing retirement income by delaying benefits.

QLACs and Social Security: The Basics
A QLAC is an annuity contract that is purchased within a traditional retirement plan, under which the annuity payments are deferred until the client reaches old age (they must begin by the month following the month in which the client reaches age 85) in order to provide retirement income security late in life.

The value of the QLAC is excluded from the retirement account value when calculating the client’s required minimum distributions (RMDs) once the client reaches age 70 ½, though the client is limited to purchasing a QLAC with an annuity premium value equal to the lesser of 25% of the account value or $125,000.

As most clients know, waiting past the normal retirement age to begin collecting Social Security allows the client to earn delayed retirement credits, which increase the eventual benefit by 8% for each year in which benefits are suspended. Because of this special treatment, most advisors counsel clients to delay claiming benefits for as long as possible in order to ensure the maximum monthly benefit level.

QLACs and Social Security Timing

The introduction of QLACs can now allow clients who have saved for retirement to avoid delaying Social Security benefits entirely—and, because of volatility in the Social Security system and the uncertainty of a client’s lifespan generally, many clients are receptive to this idea because they are reluctant to defer in the first place.

For most clients, delaying Social Security benefits past retirement age means that withdrawals from tax-preferred accounts must increase during the deferral period in order to ensure sufficient income while maximizing the benefit level for a later time. However, this means that tax-preferred accounts are depleted at a much more rapid rate early in the client’s retirement—leaving a lower account value to grow over subsequent years.

By purchasing a QLAC within the retirement account, the client can reduce his or her account distributions and eliminate the associated income tax liability, yet still secure a higher level of guaranteed income to supplement Social Security later in retirement. If the client claims Social Security benefits early in retirement, the amount that must be withdrawn from tax-preferred accounts is reduced and a larger portion of his or her retirement savings can be left in tact to grow—generating a higher account balance in the long run.

With the QLAC, the client still has a guaranteed source of income late in life—regardless of poor market performance or unforeseen circumstances—to supplement the lower Social Security benefit level that reduced the need for high withdrawals early in retirement.

Conclusion
The introduction of QLACs can change the traditional rules of retirement income planning dramatically—making it important that advisors reevaluate current strategies in order to give clients the opportunity to incorporate these products into the retirement income planning playbook.

Social Security: 5 Facts You Must Know

retirement_roadMy Comments: With the GOP now controlling the House and Senate, there is increased talk about threats to the Social Security system. After all, this is a socialist program, designed to help the financially weakest among us.

I’ve long maintained that small tweaks, similar to what Congress has already done some 20-25 years ago, will allow the system to remain viable for the next 50 years. By then it is anyone’s guess how long people will be living and expecting to receive benefits.

If you are not yet signed into the system and receiving SSA benefits, get in touch with me. I have access to sophisticated software that will be help you optimize your benefits. As the author says below, Social Security is a complicated program, one that gives you a choice of 97 months during which you can choose to sign up. The difference between the worst and best month can be hundreds of thousands of dollars to you and your family.

By: Jordan DiPietro

Social Security is a complicated program, yet you cannot afford to NOT know everything you should about your benefits. Even knowing this, it can be hard to find the information you need in order to make the most informed decisions for you and your family.

In the following TOP 5 list below, The Motley Fool’s Financial Planning Team reveals five essential, but little known facts, about the Social Security Program and how it will affect millions of Americans. Although most people expect Social Security to be there for them when they retire, they could be wrong – and by then it might be too late.

Number 5: Social Security Is Massive
In 2014, over 59 million Americans will receive Social Security. Among them are:
• 40.9 million retired workers and their dependents
• 10.8 million disabled workers and their dependents
• 6.2 million people receiving survivors benefits

Number 4: The Elderly Could Not Survive Without This Program
Many elderly Americans heavily rely on Social Security; it’s the major income source for most older Americans. In fact, Social Security benefits account for 38% of the U.S. elderly population’s income. Even more important, half of married couples and three quarters of singles receive at least half their retirement income from Social Security.

Number 3: The Workforce Is Having to Support More Retirees

Demographics are not in our favor as fewer workers support more retirees. In 1950 there were 16 workers per Social Security recipient. In 1960 there were 5 workers per recipient. By the year 2033, only 2.1 workers will support one retiree.

Number 2: The Numbers Just Don’t Add Up
Social Security relies on its trust fund in order to cover shortfalls between tax revenue it receives from workers and benefits it pays. The trust fund is projected to run out of money in 2033. Once that happens, retirees can only expect to receive about 75% of the benefits they would have received.

Number 1: The #1 Way to Increase Your Benefits

Every year you wait between full retirement age and age 70 before claiming Social Security benefits boosts the amount you receive by 8%. Those who wait until the age 70 maximum will get 32% more in benefits than those who take them at 66, and 76% more than those who take early benefits at 62. If you can afford to delay benefits until age 70 and if you live past age 82, you will receive more in lifetime income from Social Security than if you had waited until full retirement age.

4 Ways Social Security Could Be Healthy Again

Social Security cardMy Comments: As someone who paid into the SSA system for over 50 years, it’s hard to describe the satisfaction my wife and I experience from the deposits made to our checking account every month.

As an economist, I’ve watched how the system has been modified over the years to remain the safety net it was designed to be in the 1930’s. As someone versed in how money works, I’ve remained confident that similar changes will be applied over time to make sure it remains solvent and viable for my children and grandchildren.

Simply stated, it’s not going to go away. But those of you who benefit now and those who will benefit in the years to come need to pay attention. There are those in Congress who simply don’t give a damn about you unless you already have lots of money.

By Nick Thornton / December 2, 2014

The trustees of Social Security say that retirees needn’t worry about their monthly checks vanishing. But the fact is that unless Congress acts to change how Social Security is funded, benefit reductions are inevitable.

At least one federal lawmaker is pushing to do something about it. Connecticut Democrat John Larson, who’s represented the Nutmeg State since 1999, introduced the Social Security 2100 Act this summer. It has since picked up two co-sponsors.

In its 2014 annual report, the Social Security Administration said that under current law, beneficiaries can expect to see scheduled benefits reduced to 77 percent of what is now expected in 2033.

That’s when the Social Security Trust fund will be depleted. The fund was first tapped in 2010 to help cover current obligations. When that well goes dry in 2033, the program will be solely dependent on the FICA taxes raised each year to fund mounting obligations.

And that simply won’t be enough to cover promised benefits. Already, administration trustees are projecting an average annual deficit of $77 billion between this year and 2018. Things will only get worse after that, as the wave of retiring baby boomers assures the number of beneficiaries will grow substantially faster than the number of workers paying into the program.

Beneficiaries of the Disability Insurance Trust Fund are bracing for more immediate benefit reductions. By law, Social Security assets can’t be used to fund that program. Trustees expect it to be fully depleted by the end of 2016. “Lawmakers need to act soon to avoid automatic reductions in payments to DI beneficiaries in late 2016,” the trustees wrote in their most recent annual report.

Larson’s bill has been assigned to the House Ways and Means Committee, which has jurisdiction over Social Security. The chairman of that committee — influential Republican Paul Ryan – will decide whether it gets reviewed.

While Larson’s office is hopeful, at least one of the bill’s proponents is doubtful Ryan will give the proposed law a full vetting.

“Since he (Ryan) has been a strong advocate of President Bush’s plan to privatize Social Security, and since it’s up to the chairman to decide what legislation gets taken up by his committee, he is not likely to take up the legislation,” said Nancy Altman, co-director of Social Security Works, a non-profit that lobbies on behalf of Social Security’s preservation.

The bill has also been sent to the House Education and Workforce Committee and the Budget Committee, according to Ed Skowronek, press secretary for Larson.

“So far it’s the only bill that strengthens benefits and keeps the trust funds solvent,” he said. “And it proves you don’t have to cut benefits. Congressman Larson is looking forward to re-introducing it in the 114th Congress. We’re optimistic that Ways and Means will take it up for consideration.’

With all of that in mind, what follows is a look at what appear to be the most important provisions of Larson’s proposal, along with what the actuaries who watch over Social Security had to say about them.

The good news is that the Social Security 2100 Act scores well, according to a letter to Larson from Stephen Goss, chief actuary at the Social Security Administration.

The proposal scores so well, in fact, that it ultimately reduces the combined programs’ reserves to 147 percent of annual costs at the end of a 75-year projection period in 2087.

A reserve level of 150 percent is considered to be solvent, meaning Larson’s bill would leave Social Security funds with a small surplus 75 years from now, according to the actuarial estimates.

And, now, here are the four core provisions of the proposal, and how the actuaries think they will change things at Social Security.
CONTINUE-READING

Social Security Cost-of-living Adjustments Projected to Increase Slightly in 2015

Social Security cardMy Comments: Those of us old enough to be taking SSA benefits have experienced minimal increases in the last few years. That’s because the ‘official’ numbers for inflation have been low. There is an argument they should be even lower as a way to keep the so-called SSA reserves from going to empty. In my opinion, that would be a stupid way to correct the problem.

Most of us who are interested in this issue know there are much less painful remedies available. With the SSA system now in place for over 80 years, much of the US economy has adjusted with large segments of the population relying on it as we age. To disrupt that could have dramatic consequences.

If you are near 62 or beyond and have not yet signed up for benefits, get in touch with me for a comprehensive analysis of how and when to put yourself on the receiving end of a monthly check. You’ll be surprised how big a mistake it can be if you do it wrong.

By Mary Beth Franklin / Oct 1, 2014

Social Security benefits are likely to increase by 1.7% in 2015, slightly more than this year’s 1.5% increase but still well below average increases over the past few decades, according to an unofficial projection by the Senior Citizens League.

The Social Security Administration will issue an official announcement about the 2015 cost-of-living adjustments for both benefits and taxable wages later this month.

Based on the latest consumer price index data through August, the advocacy group’s projection of a 1.7% increase in Social Security benefits for 2015 “would make the sixth consecutive year of record-low COLAs,” Ed Cates, chairman of the Senior Citizens League, said in a written statement. “That’s unprecedented since the COLA first became automatic in 1975.”

Inflation over the past five years has been growing so slowly that the annual increase has averaged only 1.4 % per year since 2010, less than half of the 3% average during the prior decade. In 2010 and 2011, benefits didn’t increase at all, following a 5.8% hike in 2009.

Although the annual adjustment is provided to protect the buying power of Social Security payments, beneficiaries report a big disparity between the benefit increases they receive and the increase in costs. The majority of Social Security recipients said that their benefits rose by less than $19 in 2014, yet their monthly expenses rose by more than $119, according to a recent national survey by the advocacy group.

Social Security beneficiaries have lost nearly one-third of their buying power since 2000, according to a study by the organization. Low COLAs affect not only people currently receiving benefits, but also those who have turned 60 and who have not yet filed a claim. The COLA is part of the formula used to determine initial benefits and can mean a somewhat lower initial retirement benefit.

A 1.7% increase would increase average Social Security benefits by about $20 next year and boost the maximum amount of wages subject to payroll taxes by nearly $2,000 above this year’s $117,000 level.

Despite the fact that Social Security benefits are not keeping up with inflation, COLA reductions remain a key proposal under consideration in Congress to reduce Social Security deficits. A leading proposal would use the “chained” consumer price index — which grows more slowly — to calculate the annual increase.

The group warned that the “chained COLA” proposal may come under debate again soon. The Social Security Trustees recently forecast that the Social Security Disability Trust Fund is facing insolvency by 2016, and that changes to the program will have to be made to avoid a reduction in disability benefits.

The organization supports legislation that would provide a different measure of inflation by using the Consumer Price Index for the Elderly, which would likely result in higher annual increases than under the current method.

Hidden Bonus: Taking Early Social Security Payments

retirement_roadMy Comments: I’ve said it before and I’m sure I’ll say it again: when to claim Social Security benefits is a complex question. On one hand, if you know you will live to life expectancy, it’s a fairly simple math question. But on the other hand, if you don’t know when you will die, or when your spouse will die, it’s another matter.

Added to this uncertainty is the differential in your respective ages, how much other money you have that you can draw upon until the optimal date, your respective work histories, which determine, along with your age, how many actual spendable dollars you will get. And on and on.

This is another look at this issue.

By John Wasik,  July 11, 2014

Suppose you didn’t need to live off of Social Security, and took the “early” payments at 62?

You may do better using this strategy in terms of total lifetime payments rather than waiting until your “normal” retirement age (depends upon when you were born) or age 70 — when Social Security pays you the largest-possible payment.

The “early saver” strategy works best, of course, if you can get a decent return on your money — you don’t lose principal — and have other sources of income to support your lifestyle. It may even trump waiting until age 70, when Social Security will pay you their highest-possible benefit.

Hannah Alexander, who teaches at the University of Missouri, sent me some compelling numbers on how this strategy could work:

“The assumptions are that the person does not work (or else would not be allowed to collect Social Security), and that this person does not need the money right away, and can wait for it to grow. I agree that this person will get more money per month by waiting, but not enough to make up for the loss of not being paid for the 8 years between 62 and 70. Over a lifetime this person will make less money by waiting. And if that person indeed does not need the money, and can put it in corporate bonds at 4%, she will make even that much more over a lifetime.”
SSA 2009-2083Future payouts of Social Security Benefits in the US from 2009-2083. Source: Social Security Administration. (Photo credit: Wikipedia)

How much more? This is what Prof. Alexander figures:

“I’m using your supposed life expectancy of 85 (as the average between men and women) and your monthly payment ($1,000 for 62, and $1,320 for 70). Starting at 62 will translate to an extra $38,000. Even in a 20% tax bracket the numbers favor an early start with $30,000 extra. ”

In order for this strategy to make the most sense, the additional returns need to be compounding until age 94 for the additional savings to exceed the amount you’d receive by waiting until 70 for the higher benefit.

“Even if the person does not invest the money, or even if he/she spends it right away, and does not save a dime, this person will still be better off taking it early, because over a life time she will make more money just from the Social Security checks alone,” Dr. Alexander adds.

There’s also a huge wild card on how you invest your Social Security payments (if you choose to do so): If you take a lot of risk, it could blow up. For example, if you put all of the money in Treasury bonds, you could lose money if inflation or interest rates rise. Stocks also have their own risks.

You also have to keep in mind that many people have little or no skill investing long term, so they may fall prey to an undiversified, unhedged strategy that could diminish their Social Security nest egg. It also gets complicated with a spouse because then you are examining the value of spousal and survivor benefits.

But it’s possible to make it work if 1) you find a risk-adjusted strategy that works over time and 2) you stick to the plan through various market turns. Discipline is essential in retirement investing. If you don’t have it, hire a certified financial planner to run the numbers and keep you on track. You can also experiment with Social Security’s many online calculators. http://www.ssa.gov/oact/anypia/anypia.html

John F. Wasik is the author of 13 books, including Keynes’s Way to Wealth: Timeless Investment Lessons from the Great Economist. He contributes to Reuters, The New York Times and Morningstar.com and speaks around the country.

When It Comes to Claiming Spousal Benefits, Timing Is Everything

Family and fenceMy Comments: The questions surrounding Social Security are almost endless. It’s a complicated system and as more and more of us reach eligibility, it is clear that simply signing up as soon as you are eligible will cost you and your family lots of money and options over the years.

Philip Moeller / Sept. 9, 2014

Seemingly straightforward questions about claiming Social Security spousal benefits can wind up becoming complicated in a hurry. Here’s one answer.

Recently I received a question from a reader that opens up all sorts of concerns shared by many couples:

I am four years older than my husband. I have reached my full retirement age (66) in June 2014. My own benefit is very small ($289/month), since my husband is the bread earner. I have been mostly a stay-at-home mom.

Should I just claim my own benefit now and wait four more years for my husband to reach his full retirement age, then apply for spousal benefits? That means he will get about $3,000/month, and I will get half of his benefit.

Or should my husband apply for early retirement now, at age 62, so I can apply for my own spousal benefits? He can then suspend his benefit and wait four more years until his full retirement age to get more money.

Please advise.

First, your husband should not apply for early retirement at 62. If he does so, his benefit will be reduced by 25% from what he would get if he waits until age 66 to file, and a whopping 76% less than if he waits to age 70, when his benefit would hit its maximum.

Further, if he does file at 62, he cannot file and suspend, as you suggest. This ability is not enabled until he reaches his full retirement age of 66. So if he files early, he will be triggering reduced benefits for the rest of his life. And because his benefits are set to be relatively large, this reduction would involve a lot of money.

If your household absolutely needs the money now, or if your husband’s health makes his early retirement advisable, he could file early and then, at 66, suspend his benefits for up to four years. They would then grow by 8% a year from their reduced level at age 62 – better than no increase, but not nearly as large a monthly benefit as if he simply files at age 66 and then suspends.

I normally advise people to wait as long as possible to collect their own benefits. But this is probably not the best advice in your case. Here’s why:
When your husband turns 66 in four years, it’s clear that you should take spousal benefits based on his earnings record. You say he would be entitled to $3,000 a month at that point and that you stand to get half of that, or $1,500 a month. That $3,000 figure seems a little steep to me, so I’d first ask you to make sure that is his projected benefit when he turns 66 and not when he turns 70.

In either event, however, it’s clear that your spousal benefit based on his earnings record is going to be much, much higher than your own retirement benefit. Even if you waited to claim your own retirement benefit until you turned 70, your spousal benefit still would be much higher.

Thus, you’re only going to be collecting your own retirement benefit for four years, from now until your husband turns 66. Even though your own retirement benefits would rise by 8% a year for each of those four years, those deferred benefits would never rise enough to come close to equaling the benefits you will get by filing right away.

So, take the $289 a month for four years, and have your husband wait until he’s 66 to file for his own retirement benefit and enable you to file for a spousal benefit based on his earnings record. He may decide to actually begin his retirement benefits then or, by filing for his benefit and then suspending it, earn annual delayed retirement credits of 8% a year, boosting his benefit by as much as 32% if he suspends until age 70.

If he does wait until 70, he will get his maximum monthly benefit. But you also will benefit should he die before you. That’s because your widow’s benefit would not just be equal to your spousal benefit but would equal his maximum retirement benefit. So, the longer he waits to file, the larger your widow’s benefit will be.

Philip Moeller is an expert on retirement, aging, and health. He is an award-winning business journalist and a research fellow at the Sloan Center on Aging & Work at Boston College. Reach him at moeller.philip@gmail.com or @PhilMoeller on Twitter.

Source file: http://time.com/money/3306319/social-security-spousal-benefits/