If Max began benefits at 62 and passed away at age 80, Rosie would stop receiving her own retirement benefit and instead receive about $1,650 monthly as a survivor’s benefit.
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It also can be further reduced if the surviving spouse has claimed her retirement benefits before full retirement age. The rules can be complicated (I discuss them in detail in chapter 6), but in general the survivor’s benefit is reduced if the spouse who has passed away began his retirement benefits before reaching full retirement age (FRA). And if the surviving spouse had the smaller income, the amount she receives depends on the benefits of the spouse who has passed away. Max decided to delay his benefits because he realized that after either he or Rosie passed away, the surviving spouse would receive only one Social Security check. He would encourage Rosie, on the other hand, to begin her retirement benefits at age 62, when she would qualify to receive $1,200 monthly. If Max began his benefits at 62, he would have received $1,500 monthly.Īfter doing some research, however, Max decided to delay claiming his benefits for as long as he could, hopefully to age 70, at which point he would receive a monthly benefit of $2,640. Max initially planned to do as most people do: begin his Social Security retirement benefits at the closest possible date to age 62. Here are a few more anecdotes about Social Security decisions-in which I use fictional names-showing how these decisions can have significant and lasting effects on lifetime income and financial security. Social Security is such a valuable asset that it’s important to take the time to make better decisions. The program is complicated, and your decisions have long-term consequences. It’s understandable that people don’t make optimum decisions about Social Security. Another frequent mistake is that married couples don’t coordinate their benefits or put the emphasis that they should on maximizing the benefits of whichever spouse is the survivor. I had already determined that one of the themes of this book would be that many people make the wrong decisions about Social Security, and the most frequent mistake is to claim benefits too soon. But you tell them they should be patient. She now has to maintain the household on less money, though her costs have increased.Įverybody wants the money as soon as they can get it, and it seemed great, she told me. If he had waited to claim Social Security benefits, her survivor’s benefit would be much higher now. Her retirement benefit stopped and she now receives a surviving spouse’s benefit based on her husband’s earnings record and the age at which he claimed retirement benefits, because that amount is higher than her retirement benefit. At that point she discovered the long-term consequences of claiming Social Security benefits early. A few years back, her husband passed away. We wanted that money as soon as we could get it. She explained that as they approached retirement, she and her husband had claimed their Social Security and other retirement benefits at the earliest possible dates. A woman in her seventies quickly asked, You’re going to tell them to wait, aren’t you?
Shortly after I started working on this book, I mentioned it at a dinner party. Read moreĬHAPTER 1 You’re Richer Than You Think-and Can Become Even Richer If you want to avoid the same mistakes, you need Where’s My Money? Secrets to Getting the Most out of Your Social Security. Millions of Americans have come to regret their Social Security decisions.
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How to calculate your “longevity risk” so you never run out of money.Why working can sometimes decrease your benefits.How to minimize your total tax bill with smart Social Security choices.Whether you should take a lump sum benefit.The right time to claim your benefits-and why timing is key.
Luckily, America’s #1 retirement expert, Bob Carlson, editor of the popular Retirement Watch newsletter and website, is here to help with an easy-to-follow guide to getting the most out of your Social Security benefits. If you’re like most people, you would have to be a millionaire to earn as much from your investments as you can from Social Security.īut Social Security also comes with pitfalls, and the wrong choice can leave you poorer for the rest of your life. And it’s a mistake that almost every retiree makes. What’s the biggest retirement mistake you can make? Not taking full advantage of your Social Security benefits.
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