Many unaware of this Social Security twist

Dec 9, 2012 @ 12:01 am

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.

mbfranklin@investmentnews.com Twitter: @mbfretirepro

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

Featured video

INTV

Advisers beware: tax law has unintended consequences

Commission accounts could be preferable for some clients, and advisers could be incentivized to move from employee broker-dealers to independent channels.

Recommended Video

Path to growth

Latest news & opinion

Lightyear Capital takes 50% stake in $9 billion HPM Partners

Private equity backing could fuel acquisitions by the large RIA.

Tax law: Everything advisers need to know about the pass-through provision

The provision is tricky, but could provide advisers and business-owner clients with sizable tax savings.

Bill requiring fiduciary disclosure reintroduced in New Jersey

Measures would obligate financial advisers to tell clients they do not have to act in their best interests.

Merrill Lynch to let advisers text with clients

Texting has been a popular mode of communication for years, but in the past the firm's regulations have prevented advisers from using it.

Bear market for bonds has arrived, Gross says

10-year Treasury rate's move above 2.5% confirms outlook for fixed income, legendary bond manager says.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print