Ask the Right Question for Social Security Benefits
Author: Jeff Young
Too often, people simply ask the wrong question when it comes to their taking Social Security benefits. We’ve all heard it: “When should I take my Social Security?” This is probably not the first question to ask.
To maximize benefits, the question needs to change. The proper question should be, “What kind of social security benefits am I going to take?” Once that question gets answered, one can then ask, “Given I know what type of benefit I will take, I will now turn my attention to the timing of my claiming.”
If this sounds confusing, that’s because it is. It is very confusing, especially for married, divorced or widowed recipients. There are several different types of benefits available, and it is not unusual at all for one to take several of these during their lifetime. (For the sake of brevity, I am disallowing any discussion of disability or minor children’s benefits in this article.)
Traditional social security benefits come in various forms; among them: workers’ benefits, spousal benefits, survivors’ benefits, ex-spousal benefits and ex-spousal survivor benefits. Generally speaking, one can only take advantage of one at a time, usually the highest one but not always so. Sometimes, it pays to forgo an income stream now for a greater one later. Each of the benefits also are subject to various rules and regulations, too numerous to name here. An example would be a worker postponing their own worker’s benefits, earning delayed retirement credits from their Full Retirement Age (FRA) until age 70 while taking ex-spousal benefits. This strategy would require that they had been married for ten years or more and have not remarried.
Sometimes, one can claim several different types of benefits as their circumstances change. A wife takes spousal benefits for instance, then switches to her own benefits at age 70. Then her husband dies and she begins survivor benefits. So here she would have had spousal, workers and survivor benefits all in her retirement. Each benefit coming with its own set of rules and requirements.
Oftentimes, Social Security will automatically adjust one’s payment when a significant life change happens, such as a death of a spouse. In this case, the survivors’ own worker’s benefit ends while the higher survivor benefit continues. But it always makes sense to insure that you are getting what you are entitled to and when.
Answering the question of what kind of benefit to take and when is not always easy, but once those decisions are made, it makes for easier financial planning in retirement for both the Social Security recipients in a marriage.