All I can say is "wow!"
More than 3,300 financial advisers signed up for my Social Security Boot Camp webinar this week, and more than 240 questions were submitted in advance of the live webcast on Aug. 20.
View the archived webcast and slides by clicking here.
Although I wasn't able to answer all the questions that were submitted in advance, I was able to group them into categories that will provide fodder for my blogs and columns for many months to come. The questions gave me real insight into the most common areas of confusion and misunderstanding.
I also realized that some advisers are making the whole idea of maximizing Social Security benefits too darn hard, creating outlandish hypotheses of how to maximize benefits that just won't work. Social Security is confusing enough without adding pretzel logic.
Advisers' goal shouldn't be to show how clever they are but to help clients maximize their Social Security benefits in a way that suits their overall retirement income plan.
Remember, an individual must be at least the full retirement age of 66 to engage in creative claiming strategies. Sometimes, the age difference between the two spouses means that advisers can't suggest anything fancy.
Based on the questions that I received, it seems the biggest area of confusion is when it is appropriate for a married couple to "file and suspend."
When individuals file and suspend, they are telling the Social Security Administration that they want to file for the sole purpose of triggering benefits for their spouses but that they want to defer collecting their own retirement benefits until they are worth more later.
For every year that an individual postpones collecting benefits between full retirement age and 70, the benefits increase by 8%. The delayed retirement credits stop at 70, at which point the benefit would be worth 132% of the full retirement age benefit, plus any cost-of-living adjustments applied during those intervening years.
Creating the largest possible benefit for the biggest earner also ensures that the surviving spouse will receive the largest survivor benefit.
The file-and-suspend strategy is most appropriate when the lower-earning spouse has little or no earnings history.
In that case, the higher-earning spouse can file and suspend when he or she is at least age 66 to trigger spousal benefits.
Spousal benefits are worth half the worker's full-retirement age benefit amount if collected at full retirement age and less if collected earlier. The earliest age that a spouse can collect benefits is 62.
The file-and-suspend strategy can also be appropriate when both spouses have substantial earnings and both are at least full retirement age.
In that case, the husband may want to file and suspend to trigger spousal benefits for his wife. And the wife, who is also at least 66, can then file a restricted claim for spousal benefits only.
That way she can collect half his full retirement age benefit now while her own benefit continues to grow up to age 70 when she would switch to her own larger benefit.
The file-and-suspend strategy isn't appropriate when the second spouse isn't yet full retirement age if the intention is for her to restrict her claim to spousal benefits only. That won't work.
She must be at least 66 to file a restricted claim.
Remember what I always say: 66 is the magic age for creative claiming strategies. If your client isn't at least full retirement age or older, don't suggest strategies that they can't use.