I love hearing from InvestmentNews readers as they discover the mysteries of strategies for claiming Social Security.
One adviser from Gaithersburg, Md., recently wrote about the pleasant surprise he received when he filed for Social Security benefits at his normal retirement age and restricted his claim to spousal benefits.
I've always told my clients that if they do the so-called double dip file for spousal benefits only and delay collecting their own, larger benefit until later they would get 50% of their spouse's benefit, Jim wrote. I didn't find out that that's not true for most people until I did it myself, and the result is good news!
Jim's wife retired at 62 and filed for her retirement benefits. When Jim turned 66 this year, he filed for spousal benefits and expected to receive half of her benefits at 62.
To my surprise, I received a larger check, Jim wrote. The 50% spousal benefit that everyone talks about is half of the primary insurance amount the benefit at normal retirement not half of the age-62 amount.
The bottom line: Jim now receives 63% of his wife's age-62 benefits.
After congratulating him on his windfall, I confirmed that filing for spousal benefits at his normal retirement age entitles him to half of his wife's full retirement benefit, even if she collected reduced benefits early.
I noted that claiming rules are a double-edged sword, however. Many people are disappointed to learn that they won't get half of their spouse's enhanced benefit if that spouse delays collecting Social Security until 70, when benefits are worth the maximum amount.
If the spouse with the bigger retirement benefit dies first, though, the survivor will collect 100% of what the deceased spouse did, including the extra credits. Of course, the survivor's own retirement benefits drop off at that point.
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