Discover’s New Social Security Alert Feature: What Does It Do?

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Earlier this summer, Discover rolled out a free service to help protect its cardholders from identity theft. This service alerts cardholders when their Social Security numbers have been compromised and left vulnerable to criminals.

This feature is a natural fit for a credit card industry that increasingly prioritizes security. But if you’re a Discover customer (or you’re interested in becoming one), you may be curious why that security is so important and what the new feature actually does.

The Dark Web Threat

According to Javelin Strategy & Research, over 15 million Americans were victims of identity fraud in 2016, with losses amounting to $16 billion. Consumers are particularly vulnerable to identity theft after a data breach leaves their personal information—like Social Security numbers and credit card information—exposed.

After a data breach, stolen information may be listed for sale on illegal websites on the dark web, an area of the internet that can’t be indexed or located by search engines like Google. Some dark web marketplaces exist solely to traffic in illegal goods and information, including stolen consumer data. If personal information is compromised in a breach, a stolen Social Security number is up for grabs.

Thieves can then use acquired Social Security numbers and other private information to create accounts and take out loans, which can wreak havoc on a victim’s credit.

Discover’s Social Security Alerts

Discover Social Security alerts can help fight against identity theft by monitoring the dark web for your Social Security number.

“Once a cardmember signs up for our new free alerts, Discover will monitor thousands of risky websites that are known to illegally sell or trade information and will notify cardmembers if their Social Security number is found,” says Laks Vasudevan, Discover’s VP of global products and solutions. “In [addition], we’ll monitor cardmembers’ Experian credit reports and notify them if any new credit accounts—such as credit cards, mortgages, or car loans—are opened in their name.”

If Discover finds a customer’s information on one of these sites, the customer will be notified via email or text alert.

Beyond the Alert

Being aware of a security risk is an important first step in the battle against identity theft. But addressing identify theft will require further action.

If a cardmember receives a Social Security alert, Vasudevan said they should call Discover so agents can help them identify the right course of action. Agents may advise cardmembers to put a freeze on their credit report or put them in contact with an Experian fraud expert.

Prioritizing Security

“Helping Discover cardmembers protect their personal information is one of our highest priorities,” says Vasudevan. “We know that identity theft and fraud is a concern for people everywhere, including our cardmembers, which is why we expanded our monitoring features beyond our cardmembers’ Discover accounts.”

Whether you’re a Discover cardholder or not, you should always take precautions to safeguard your personal information and fight identity theft. You can start by checking your credit report for free at Credit.com.

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Note: It’s important to remember that interest rates, fees, and terms for credit cards, loans, and other financial products frequently change. As a result, rates, fees, and terms for credit cards, loans, and other financial products cited in these articles may have changed since the date of publication. Please be sure to verify current rates, fees, and terms with credit card issuers, banks, or other financial institutions directly.

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Here’s How to Find Out How Much Social Security Income You’ll Receive

At what age will you retire? How much can you expect to receive each month when you do? These are important questions even if you are decades away from retirement, and there’s an easy way to get answers anytime. We’re going to show you how to get your Social Security benefits statement online and what to do with it once you’ve got it.

A little background:

Depending on your age, you may remember getting a printed Social Security benefits statement in the mail. Prior to 2011, the Social Security Administration (SSA) mailed statements to all workers every year. Those annual mailings were discontinued in 2011 as a cost-saving measure. The following year, the SSA made the statements available online, but their decision caused a bit of an uproar. Despite the agency’s outreach campaign, far fewer people registered for an account than there were eligible workers. So in 2014, Congress required the agency to resume sending printed statements every five years to workers age 25 and older who hadn’t registered for an online account.

That schedule remained until earlier this year when the agency announced that due to budget restraints, paper benefit statements will only be mailed to people who are 60 or older, have not established an online account, and are not yet receiving Social Security benefits. Simply put, don’t expect to get a printed statement anytime soon.

How to get your Social Security benefits statement

Accessing your Social Security benefits statement online is pretty simple, as long as you have an email address and can provide some basic identifying information.

First, go to ssa.gov/myaccount and click on “Sign In or Create an Account.”

If you’ve never created an online account with the SSA, you’ll click on “Create an Account.” If you’ve set up an account before, you won’t be able to create a new account using the same Social Security number. If you’ve forgotten your username or password, the SSA website offers tools to help recover them.

When you select “Create an Account,” the site will lead you through a few questions to verify your identity. You’ll need to provide personal information that matches the information on file with the SSA as well as some information matching your credit report.

Ryder Taff, a Certified Financial Adviser with New Perspectives, Inc. of Ridgeland, Miss., helps many of his clients set up Social Security accounts and says the questions often have to do with past residences or vehicles that may have been registered in your name.

If you have trouble setting up your account online, you can call the SSA for help at 1-800-772-1213.

Information in a Social Security benefits statement

Your Social Security benefits statement provides several valuable pieces of information:

  • A record of your earnings, by year, since you began having Social Security and Medicare taxes withheld.
  • Estimated retirement benefits if you begin claiming Social Security at age 62, full retirement age, or age 70.
  • Estimated disability benefits if you became disabled right now.
  • Estimated survivor benefits that your spouse or child would receive if you were to die this year.

Here’s a sample of what your benefits statement will look like:

Keep in mind that the estimated benefits shown are just that — estimates. The amounts shown are calculated based on average earnings over your lifetime and assume you’ll continue earning your most recent annual wages until you start receiving benefits. They are also calculated in today’s dollars without any adjustment for inflation. The amount you receive could also be impacted by any changes enacted by Congress from now until the time you retire.

What to do with your Social Security benefit statement

It’s a good idea to check your earnings record for errors once per year. It’s not uncommon for earnings from certain employers or even all of your earnings from an entire year to be missing, and you’ll want to get that corrected right away because benefits are calculated on your highest 35 years of earnings. “Any missing years will be just as damaging as a zero on a test was to your GPA,” Taff says. “Gather your documents and correct ANY missing years, even if they aren’t the highest salary. Every dollar counts!”

If you do spot any errors, grab your W-2 or tax return for the year in question and call the SSA at 1-800-772-1213. You can also report errors by writing to the SSA at:

Social Security Agency
Office of Earnings Operations
P.O. Box 33026
Baltimore, MD 21290-3026

Reading your statement is also a good reminder of how much you need to save for retirement outside of Social Security. Chances are, you won’t be happy living on just your Social Security income in retirement.

The good news is, the longer you delay taking your benefit, the higher your annual benefit will be. You can begin taking Social Security retirement benefits at age 62, but your payments will be smaller than they would be if you waited until full retirement age (FRA). Currently, your annual benefit increases by 8% for each year you delay taking your benefit from FRA until age 70.

Colin Exelby, president and founder of Celestial Wealth Management in Towson, Md., says that using your Social Security benefits statement can be particularly useful for retirement planning for couples. “Depending on your age, health, family health history, and financial situation there are a number of different ways to claim your benefits,” he says. “Each individual situation is different, and many couples have different views on the decision.”

If you are nearing retirement, you can use your benefits statement to work with a financial adviser to help you maximize total benefits, or run through various scenarios using a free online tool like the one provided by AARP.

Setting up your Social Security account is simple, free, and helpful for retirement planning, but it’s also a good security measure. It’s impossible to set up more than one account per Social Security number, so registering your account is a good way to prevent identity thieves from establishing an account on your behalf.

Take the time to set up your Social Security account and find out how much you might be entitled to receive in benefits. It could help you feel more empowered to take charge of your retirement plan.

The post Here’s How to Find Out How Much Social Security Income You’ll Receive appeared first on MagnifyMoney.

Should You Take Social Security Benefits at 62?

The vast majority of workers choose to receive their Social Security benefits as soon as they turn 62. And they could be leaving a lot of money on the table. In fact, nearly three-quarters of the 39 million retirees in the U.S. are receiving reduced benefits because they began taking Social Security before they reached full retirement age, according to the Social Security Administration’s 2015 Annual Statistical Supplement.

In fact, you’ll only receive 75% of your benefits if you start taking Social Security at 62. For every year until you reach “full retirement age” (66), the greater your benefit check will be. The chart below shows you exactly how much your benefit will be affected by electing your benefits early.

Age Percentage of Benefit
62 75%
63 80%
64 86.7%
65 93.3 %
66 100%

 

But decisions like this are rarely cut and dried. If you’re younger than 62 and contemplating when you should elect your Social Security benefits, we’re going to discuss the factors you should consider first.

3 Reasons You Should Take Social Security Benefits at 62

The Social Security retirement benefit is a bit of misnomer because you don’t actually have to be retired to receive the benefit. Under certain circumstances, electing your Social Security benefit at 62, or any other time before full retirement age (66), could be the right decision for you.

  1. You need the income to meet your basic daily needs. When considering whether or not you should begin receiving Social Security benefits at age 62, look at your budget. Since Social Security will effectively serve as a paycheck, think about whether or not you actually need the additional income.
  2. You don’t have longevity in your family. Nobody wants to leave money on the table. If you don’t have longevity in your family or simply expect your lifespan to be shorter than average, it is worth considering taking your benefits early. Just keep in mind that upon your death, however, your spouse will receive a lower survivor’s benefit than he or she would have if you had waited.
  3. You need to be retired. There are a host of indications that it is time to retire. If you’re realizing one or more of them, but your retirement savings are not enough to sustain your lifestyle, electing your benefits at 62 could be a wise decision.

3 Reasons to Wait to Take Social Security Benefits Until After Age 62

The most common reason someone will tell you to wait until full retirement age is that your annual benefit is reduced if you take it sooner. If you elect benefits at age 62, expect to receive a 25% smaller benefit that you would receive at age 66, for the rest of your life. In addition to the downside of a reduced benefit, think about how these factors apply to your life:

  1. You can afford to wait. If your budget does not rely on the additional income that will be provided by Social Security, your patience will be handsomely rewarded. Your benefit amount increases with each year you wait, up until you turn 70.
  2. You’re still working and making too much money. “Too much money” sounds quite relative, but in terms of Social Security, individuals who elect benefits before full retirement age will have their benefits reduced by $1 for every $2 earned over $16,920. For people older than full retirement age, but younger than age 70, benefits will be reduced $1 for every $3 earned over $44,880.
  3. You will get a larger benefit if you wait.
  1. You’re rewarded for your patience in two ways, and the first is through earnings alone. Your Social Security benefit is determined by the 40 highest-earning quarters of your work history. So, if you’re 62 or older and earning more money each quarter, it could mean a larger monthly benefit when you eventually elect Social Security.
  2. Whether or not your earnings increase during the final quarters of your working years, the Social Security Administration will also reward you for waiting to take your benefit until age 66 or later.
Age Percentage of Benefit
66 100%
67 108%
68 116%
69 124%
70 132%

3 Ways to Boost Income and Avoid Taking Social Security Benefits Early

The Annual Statistical Supplement does not discuss why so many people elect benefits before full retirement age, but if you are considering an early election of your benefits due to an income need, judge the following first:

  1. Your budget
  1. Can you generate enough monthly savings to offset your Social Security benefit before full retirement age? The benefits of waiting to take your Social Security benefit far outweigh the costs, so if you’re able to apply a short-term solution for a larger, long-term benefit, it could be in your best interest.
  1. If retired, take a part-time job
  • . According to the 2015 Annual Statistical Supplement, the average monthly benefit for a retired worker was $1,329. If after assessing your monthly budget, and the deficit you hoped to fill with Social Security is close to or below what your monthly benefit would be, think about a part-time job. Your annual income will likely fall below the threshold for a reduced benefit, and you will avoid a lifelong reduction in Social Security benefits.
  1. Consider adjusting your portfolio to a more income-oriented allocation
  • . Disclaimer: This approach should be discussed with a professional. If you have retirement or investment accounts, you have two strategies at your disposal to help generate income:
    1. Take dividends in cash, rather than reinvesting. While this may provide a stream of income, it could also slow the growth of your investments.
    2. Adjust your asset allocation to one that is income-oriented. Then, take the dividends in cash.
  1. Acknowledging that this approach is more complicated than the previous two, it is also a prudent one because it is reversible. The last thing you want to do, as you approach what could be decades in retirement, is permanently reduce any stream of income.

The Bottom Line

Think about the timing of your Social Security like a tattoo. Both can act like a double-edged sword in your life and, for discussion’s sake, are irreversible. Deciding to get a tattoo is not always a good decision; similarly, electing to take Social Security at 62 is not always a smart choice either. However, the reverse is also true, and the only way to know if this choice is right or wrong is to weigh the factors at play in your life against the consequences of your decision.

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Credit Expert Confession: I’m Afraid of Retirement

retirement

I’m not easily rattled. When it comes to fear, I’m not shaken by spiders, horror movies or even unknown sounds on a dark city street. As a 30-something journalist, wife and mother, my greatest fear boils down to one word: retirement.

I’m not alone in my trepidation. A Transamerica Center for Retirement Studies survey revealed that 41% of Americans are doubtful about their ability to retire. For younger generations, the goal is more difficult than ever thanks to a new set of challenges.

Life Expectancy

According to the Center for Disease Control and Prevention, the current life expectancy for Americans is 78.8 years. Although living longer can be a comforting thought, it’s also financially complicated. A retiree who leaves the workforce at 65 reportedly needs approximately 80% of their final income to account for every year of retirement. Assuming you earn $100,000 per year, your savings should be — at minimum — $1.2 million. That certainly isn’t a subtle amount.

The Uncertainty of Social Security

While it’s likely that Social Security will exist in the decades ahead, don’t expect the payout to support your old age. A 32 year old earning $100,000 per year will only qualify for $1,830 in monthly benefits by the age of retirement, according to the Social Security Administration’s quick calculation tool. Unfortunately, this meager sum isn’t enough to sustain the average post-employment lifestyle.

Student Debt

My college days are long behind me, but the student loans that helped me fund my education are still very present in my life. Setting aside monthly funds for education debt can mean sacrificing retirement savings.

The Future for Children

Independence isn’t a given in today’s world. In fact, 32.1% of adults ages 18 to 34 live at home with their parents, according to a Pew Research study. The challenges of unemployment, a high cost of living and student loan debt have forced this generation back into the nest — whether they like it or not. Will circumstances change as my child ages, or can I look forward to a 30-year-old sleeping in my basement? I don’t know, but I worry about the answer and its impact on my retirement income.

3 Ways to Help You Address These Concerns

These concerns are common for people in every age group, and it begs the question, What is the solution? These risks aren’t likely to go away as time passes, but there are a few ways to minimize the consequences.

1. Save as Much as Possible

Time is a valuable asset when saving for retirement, and it’s never too soon to invest.

  • Pay Off Debt Sooner: Losing money to interest fees means you’ll have less to invest for the future. Talk to a financial planner about the best way to tackle debt and prioritize savings. A healthy balance is essential.
  • Max Out Your Retirement Contributions: Many companies match a percentage of their employees’ 401K contributions. Check with your employer and see if this is the case, and then take advantage of this as soon as you can. It’s a good idea to max out your matching contributions and consider upping your monthly investment as well. For example, suppose you currently set aside 10% of your income for retirement. Would a budget overhaul allow you to increase your savings to 15%? Think carefully about your daily spending choices and how they will impact your future.
  • Consider Tax Implications: Investment vehicles come in many forms, and taxation could save or cost you thousands of dollars. Strategize with your financial planner to determine the best way to invest.

2. Live Within (or Below) Your Means

The housing crash of 2008 taught us a valuable lesson about the dangers of overspending. It’s easy to risk your financial safety by splurging too often or borrowing too much. In reality, I feel it’s wise to keep 15% of your income in liquid savings and another 15% or more for retirement. Do you have the ability to funnel 30% of your income into savings? If not, perhaps it’s time to rethink your budget.

3. Focus on Credit Health

Retirement is one of many factors that benefits from credit health. A high score allows you to save money on variable and fixed interest rates, insurance premiums and even qualifies you for better employment. (You can see how your habits are affecting your credit by viewing two of your credit scores for free, updated each month, on Credit.com.)  

None of us can predict the challenges we’ll face as retirement nears. Although my doubts and fears are likely to rage well into my 60s, I’ve found that saving for those final years is the best way to prepare.

This story is an Op/Ed contribution to Credit.com and does not necessarily represent the views of the company or its partners.

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Do You Need Disability Insurance?

need_disability_insurance

Imagine you had a machine that sat in the corner of your office and generated the equivalent to your entire annual salary. It dependably spits out money, month after month, year after year, without fail. Would you purchase a warranty on that machine? Would you call your insurance agent and buy an insurance policy to protect your money machine? Of course you would.

Well, that machine is you. A disability policy provides the assurance that your “machine” can continue to generate a consistent income each and every year, if you become sick or injured and unable to work. Most of us have purchased a life insurance policy or have one that is provided to us at work. However, many do not own any disability insurance, or are woefully underinsured. I believe that disability insurance is equally important, if not more vital than life insurance. Whether you are married, single, with or without children, owning a disability insurance policy is critical to your financial security if you rely on your earned income to pay your bills. Once you can afford to retire, you no longer have the need for coverage and can let it go. (Full Disclosure: As a Certified Financial Planner, I do sell disability insurance.) 

How Much Do I Need?

You should own enough disability insurance to pay your non-discretionary expenses. If disabled, you might not be able to afford vacations or entertainment, but you will still need to pay your mortgage or rent and utilities. [Editor’s note: Failing to pay loans and everyday bills can seriously damage your credit scores and subject you to debt-collection activity. To keep an eye on how your credit is faring, you can get two free credit scores with regular updates from Credit.com.]

In my experience reviewing my clients’ policies, most disability insurance companies limit the payout to 60% to 75% of your pre-tax income. The reason for this limitation is that they do not want to incentivize you to become disabled. Obviously, most of us do not want to be disabled, but fraudulent claims are always a possibility with unscrupulous people. If you pay the disability insurance premium with after-tax income, then a 60%-to-75% benefit could replace most, if not all, of your after-tax take home pay.

What If I Already Have Benefits at Work?

If your employer provides disability insurance for you, consider yourself one of the fortunate few. According to 2014 data from the Bureau of Labor Statistics, only a third of American workers (in the private sector) have long-term disability through their employer.

If your income includes a bonus, chances are that bonus is not covered. As I review my clients’ employee benefits, I have seen that most of the disability benefits only cover the base salary and do not include the bonus. So if your total compensation of $70,000 comprises $60,000 in base salary and a $10,000 bonus, your annual benefit would likely be between $36,000 and $45,000. If your employer pays all of the cost of this benefit, then the disability payments to you would be fully taxable. You could, however, purchase additional coverage on your own to cover the bonus. Typically you might qualify for at least an additional $7,000 to cover your bonus, bringing your total disability benefit up to $43,000 to $52,000 per year.

Disability insurance isn’t cheap: There are many factors, including age, gender and occupation, that can significantly affect the premium; you can easily pay 1% to 3% of your annual income for it, but not having it when you need it could be devastating to your finances.

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7 Social Security Tricks You Can’t Use Anymore

social-security-benefits

The Bipartisan Budget Act signed into law on November 2, 2015 effectively eliminated the File and Suspend and Restricted Application strategies for anyone younger than 66 and 62, respectively. These “unintended loopholes” were the product of three legislative changes that allowed for creativity, flexibility and pay raises for those who were well-informed. As of May 1, the party is over. So what’s the best way to adapt? Here are a few strategies.

Strategies That Apply to Everyone

The Do Over 

According to the Social Security Administration, 74% of beneficiaries collect early. I assure you at least some of these folks will regret their decision. The good news is if that regret comes within a year, you can pay back the benefits you’ve received in a lump sum, and you will be treated as if you never took them at all.

Voluntary Suspension

In certain instances, it does make sense to turn on Social Security early. You may simply need supplemental income, or you may want to trigger benefits for a minor child. But it may not be a permanent need. If you decide for any reason that you no longer need that payment, you can suspend it. Your benefit will start to earn delayed retirement credits until you are 70.

Strategies That Apply to Married Couples If at Least One Spouse Is 62 or Older

Restricted Application

This “loophole” is being phased out by the Bipartisan Budget Act of 2015. However, if you were born before January 1, 1954, you are still eligible to file for a restricted application when you reach full retirement age. This allows one spouse to collect a spousal benefit based on the other spouse’s earnings record while Spouse One’s benefit continues to grow until age 70. At 70, Spouse One will switch back to her increased benefit. In order to use this strategy, Spouse Two has to be collecting his benefit or have filed and suspended before May 1.

Strategies That Apply to Married Couples If Both Spouses Are Under 62

Higher Earner Delays, Lower Earner Gets a Raise

When married couples are planning for retirement, it is very important, if possible, for the higher-earning spouse to wait until age 70 to collect his or her benefit. Not only will the higher benefit increase by 8% every year between full retirement age and 70, but the benefit will also become the survivor benefit should that person die before his or her spouse. Depending on the gap in earned benefits and whether or not the lower earner is still working, it often makes sense for the lower earner to start collecting early. If the person is fully insured but not working, she or he can collect at 62. If the person is still working at 62, it probably makes sense to wait until she or he stops working or reaches full retirement age so that the earnings offset isn’t a factor.

Strategies for Widows and Widowers

Collect Now, Survivor Later

If a surviving spouse had a significantly lower earned benefit than the decedent, he or she should collect the benefit at age 62. Once the recipient hits full retirement age, he can switch over to the survivor benefit.

Survivor Now, Collect Later

If a couple had similar records, it makes sense for the survivor to take the survivor benefit as early as possible, at age 60. His own earned benefit will continue to grow until age 70. At 70, the person will switch over to her earned benefit.

Strategies to Claim on Your Ex-Spouse

Restricted Application

The rules for divorced couples are very similar to those for married couples, so long as the marriage lasted at least 10 years. The restricted application strategy described earlier can be used by only one spouse in a married couple. If you’re teetering on the edge of divorce, this may get you there. If you are divorced, both you and your ex can claim a spousal benefit on each other while your own benefits grow in the background until you begin receiving them at age 70. It’s essentially the restricted application times two.

Every single one of these strategies has exceptions, and this is by no means a comprehensive list. Until the most recent legislation, there were 567 different ways to collect Social Security. You should work with your financial planner to develop a customized claiming strategy. Make sure that as you are putting together that strategy, the rest of your assets, liabilities, income and expenses are factored in. Social Security is an important piece of the puzzle but should never be considered in a silo.

Remember, before you make any serious money moves, especially when planning for retirement, be sure you know where your credit score stands. You can view your scores, updated monthly, for free on Credit.com.

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Social Security Is Changing Soon. Here’s What You Need to Know

calculating_taxes

There has been much buzz about Social Security recently—and with good reason.

Section 831 of the Bipartisan Budget Act contains the first major change to Social Security claiming rules since the Senior Citizen Freedom to Work Act in 2000. Finding out who is affected and what they need to do is a challenge. The Social Security Administration sent an emergency message to its field offices in February explaining how its employees should implement the changes. The staff in SSA field offices are still trying to get up to speed. Adding to their confusion is the fact that Social Security policy prohibits its agents from giving advice on claiming strategies.

What’s Changing?

The Budget Act was signed into law in November 2014 but has a six-month grace period during which certain folks can still take advantage of the old rules. Social Security has not firmed up these dates, but the best information available suggests that effective April 30, it will no longer be possible to file for benefits and immediately suspend those benefits — a strategy commonly referred to as “file and suspend.” (More on that strategy later.)

The other strategy being eliminated is “restricted application.” This will no longer be an option for beneficiaries born after Jan. 1, 1954. In short, this strategy involves claiming a spousal benefit between ages 66 and 70, thereby allowing your benefit to grow until age 70. At 70, you switch to your own benefit.

If you were born on or before April 30, 1950, you are still eligible to file and suspend. If you already have a suspended benefit, you will not be affected by the change. There are a few reasons why you may want to take advantage of this before April 30.

How These Strategies Work

First, filing and suspending allows your monthly income to grow by a certain amount every year. This is referred to as Delayed Retirement Credits. The kicker with the file and suspend strategy is that if you decide at any point between your full retirement age (FRA) and 70 that delaying your benefits was a bad move, you can request a lump sum of the benefits you missed out on by not claiming at your FRA. This may make sense if you were planning on working until 70, but were unexpectedly laid off and suddenly need that income. Second, filing for a benefit allows eligible beneficiaries to claim a spousal benefit.

Let’s say you want to continue to work, but your spouse didn’t work long enough (10 years or 40 quarters) to qualify for his/her own benefit. You can file and suspend, which would allow you to continue to work, earn delayed retirement credits, and enable your spouse to take half of your full retirement age benefit (PIA). This can also be a nifty strategy for those 66 or older who have minor children because filing and suspending will allow those children to claim a benefit until they turn 18.

The restricted application is often used in conjunction with the file and suspend strategy. It usually makes sense for couples with similar benefits, as illustrated by the following example:

  • John and Jane are married.
  • John: Age: 66
  • SS Benefit (PIA): $1,500/m
  • Jane: Age: 64
  • SS Benefit (PIA): $1,000/m

In this scenario, Jane could file a restricted application for spousal benefits in two years at age 66 and would receive $750/month (half of John’s PIA). This would allow her benefit to grow by 8% over the four years that she collects a spousal benefit. At 70, she would switch back to her benefits based on her own earning record. At that point, she would receive $1,320/month (8% growth every year for four years = $1,000 x 1.32). Here is the catch: John would have to file for benefits in order for Jane to take advantage of this strategy. If John, too, wants to let his benefit grow until age 70, he can file and suspend, but must do it before April 30.

Considering Your Options

The restricted application and file and suspend claiming strategies are now being called “unintended loopholes” by the Social Security Administration, exploited by financial planners and attorneys and the clients they represent. As one of the former, I can confirm that we do use these strategies for most of our clients. By the way, anyone — regardless of his or her wealth — can put these strategies to work.

At this point we are scrambling to make sure that our clients are considering this advice. At our most recent class, a client told us that it took her three months to get an appointment at her local SSA office. The good news is that these strategies can be implemented by phone, at SSA.gov, or in your local office.

Prior to these changes, there were 567 (not a typo) different ways to claim Social Security benefits. There is no way in this column to cover every scenario or even touch on everyone affected. If you think you may be impacted and don’t know what to do, you can contact your financial planner. If you don’t have a financial planner or he or she doesn’t offer Social Security advice, you can consider seeking out one who does. You can ask a planner run the optimal scenario and give you the language to take to SSA.

[Editor’s Note: You can monitor your financial goals (like building good credit) for free on Credit.com.]

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