As couples approach retirement, deciding when to start collecting Social Security benefits becomes a critical financial decision.
Understanding the rules and benefits can help maximize retirement income.
Meet Jane and John
Consider the case of Jane, 58, and John, 64. John started receiving Social Security at 62, while Jane is weighing her options of either starting her benefits now or waiting until her full retirement age (FRA) of 67.
She’s also exploring the possibility of collecting spousal benefits from John and switching to her own later.
Key Rules and Regulations
The Bipartisan Budget Act of 2015 eliminated the "file and suspend" strategy. Now, eligible individuals must apply for both personal and spousal benefits simultaneously under the deemed filing rule.
This means Jane will receive a combination of both benefits, capped at a higher amount.
Spousal Benefits
Jane can receive up to 50% of John’s primary insurance amount (PIA) if she waits until her FRA.
If John’s PIA is $1,500, Jane’s maximum spousal benefit would be $750. However, starting benefits before reaching FRA will result in a permanently reduced amount.
Financial Considerations
Jane must evaluate her entire financial situation, including other income sources and assets, to make an informed decision.
Early filing for benefits will reduce the monthly amount, but waiting until FRA or later can significantly increase the total lifetime benefit.
Conclusion
Understanding the intricacies of Social Security benefits and planning accordingly is crucial for a financially secure retirement.
Couples like Jane and John must consider all options and rules to maximize their benefits. For personalized advice, consulting a financial advisor can be beneficial.
For more information on Social Security benefits, visit the Social Security Administration website.
Previous article: What to Do After Applying for NYCHA's Section 8 Housing Waitlist in NYC
