Barbara: I am a single woman and I plan to retire in March 2021 when I turn 68. A Social Security Administration representative suggested that I request a lump-sum payout of retroactive benefits when I claim benefits. Should I do that?
MBF: Requesting a lump payout can make sense for some people, particularly single individuals who may want an infusion of cash upon retirement as they adjust their budget to life after work.
Although I often recommend that one spouse in a married couple delay claiming benefits until age 70 to create the largest possible survivor benefit for the remaining spouse, single individuals generally do not have eligible survivors and therefore should focus on their Social Security claiming decisions based on their current and future retirement income needs.
For every month you postpone claiming Social Security beyond your full retirement age, your benefit increases by 0.66% for a total of 8% per year in delayed retirement credits up until age 70.
However, you cannot receive a lump-sum payout and delayed retirement credits for the same period.
Individuals who are full retirement age or older when they file for Social Security have the right to request a lump-sum payment of up to six months of retroactive benefits, beginning no sooner than their full retirement age. Because a portion of their past benefits are paid out in a lump sum, their future monthly benefits will be slightly smaller.
Individuals who file for benefits before their full retirement age are not eligible for lump-sum retroactive benefits.
In your case, if you requested a lump-sum payout of six months of retroactive benefits at age 68, your monthly retirement benefits would be paid as if you claimed at 67 and six months. That means your monthly benefits would be based on your full retirement age benefit amount plus 18 months of delayed retirement credits, rather than the full 24 months of delayed retirement credits.
For more information on eligibility rules for lump-sum payouts, see www.ssa.gov/OP_Home/handbook/handbook.15/handbook-1513.html.
Mary Beth Franklin, a certified financial planner, is a contributing editor for InvestmentNews.
Eliseo Prisno, a former Merrill advisor, allegedly collected unapproved fees from Filipino clients by secretly accessing their accounts at two separate brokerages.
The Harford, Connecticut-based RIA is expanding into a new market in the mid-Atlantic region while crossing another billion-dollar milestone.
The Wall Street giant's global wealth head says affluent clients are shifting away from America amid growing fallout from President Donald Trump's hardline politics.
Chief economists, advisors, and chief investment officers share their reactions to the June US employment report.
"This shouldn’t be hard to ban, but neither party will do it. So offensive to the people they serve," RIA titan Peter Mallouk said in a post that referenced Nancy Pelosi's reported stock gains.
Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.
Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.
