Escapees January-February 2024

available income sources. You are eligible to begin bene fi ts as early as age 62, but it would cause you to receive a permanent reduction in your PIA. If you take your bene fi ts before you reach your full retirement age, you are subject to an earnings test and the Social Security Administration will deduct $1 from your payments for every $2 you earn above a designated annual limit. Spousal Bene fi ts Social security provides special rules for spouses. Assuming the requirements are met, you can claim spousal bene fi tson your husband or wife even if you are not entitled to bene fi ts on your own record. If you wait until your full retirement age to claim spousal bene fi ts, you get 50% of your spouse’s PIA. Married couples can use various claiming strategies to maximize their combined bene fi ts. For example, one spouse might choose to claim bene fi ts early, while the other delays until age 70, thereby increasing the overall household income.

Although social security is a vital component of the fi nancial safe ty net for many retirees in the United States, I have often experi enced clients making uninformed decisions regarding claiming strategies. The complex rules and bene fi t formulas make it extreme ly di ffi cult to understand exact ly how this important income source actually works. F or proper planning, you need to understand some basics of how bene fi ts are calculated. Your bene fi ts are based on your average monthly earnings during your 35 highest-income years, adjusted for in fl ation. If you do not have 35 years of earnings, a zero will be used in the calculation which will lower the average. Next, social security applies a formula to your average indexed monthly earnings to determine your primary insurance amount (PIA), which is the base amount of your monthly bene fi t. When to Claim When it comes to social security, the age at which you decide to claim your bene fi ts can greatly affect the monthly amount you receive. The PIA is the amount you will receive if you start collecting a bene fi t at your normal or full retirement age, which varies depending on your year of birth. The full retirement age is 66 for those born between 1943 and 1954 and gradually rises to 67 for those born in 1960 or later. Social Security retirement bene fi ts are increased by a certain percentage for each month you delay starting your bene fi ts beyond full retirement age. For each year you postpone taking bene fi ts past full retirement age, you receive an 8% boost in delayed retirement credits, up to age 70. If you decide to delay your retirement, be sure to sign up for just Medicare at age 65. Does this mean it is in your best interest to delay bene fi ts until age 70? Not neces sarily. Some factors to consider include the health of you and your spouse, family longevity, tax implications and other

“Maximizing your social security bene fi ts, including spousal and survivor bene fi ts, can play a signi fi cant role in ensuring a secure and comfortable retirement.”

Survivor Bene fi ts Survivor bene fi ts are an often-overlooked aspect of social security claiming strategies, but they can provide critical fi nancial support for surviving spouses. Survivor bene fi tsare available to surviving spouses of deceased individuals who were eligible for social security bene fi ts. Widows and widowers can typically claim survivor bene fi tsas early as age 60 and have been married for at least nine months at the time of death. Fortunately, there are a few exceptions to these requirements. If the late bene fi ciary’s death was accidental or occurred in the line of U.S. military duty, there’s no length-of marriage requirement. Also, if you are caring for children from the marriage who are under 16 or disabled, you can apply at any age.

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January/February 2024 ESCAPEES Magazine