You’ve worked hard for a relaxing and fulfilling retirement. You want them to be everything you dream of, which means you need a healthy dose of planning and strategizing to go along with your dreaming. And one important piece of the retirement planning puzzle that often gets overlooked is Social Security.
Even though you have enough wealth to provide for your later years and won’t be relying on Social Security, don’t ignore your benefits! After all, they are rightfully yours; taking the time to optimize them for your unique situation will be well worth the effort.
For the Single Women
Many women make the mistake of claiming Social Security as soon as they’re eligible. Few wait until full retirement age, and even fewer wait until age 70. But your benefit amount increases by 8% each year from 66 to 70, plus cost of living increases for inflation, so it pays to wait. (1)
For example, let’s say your full retirement age is 66 and your monthly payment is estimated to be $2,000. The chart below shows how much you’d get every month if you started collecting at age 62 (reduced benefits), 66 (full benefits), and 70 (increased benefits).
Just by waiting until age 70, your monthly payout increases by 32% each month, which could lead to thousands of more dollars throughout your retirement for you to invest or gift to others. (2)
But when you should claim benefits isn’t as simple as waiting until age 70. Your health, home, and personal circumstances could indicate otherwise. Maybe you find out you have advanced-stage breast cancer, so you start taking benefits at age 62. Or maybe you are in good health and since you have plenty of other resources, so you wait until age 70. Tailoring your claiming strategy to your unique life circumstances is key, and a professional can help you take all factors into account.
For Those Who Are Divorced
This may come as a surprise, but divorcées can claim their ex-spouse’s benefits as long as they were married for at least 10 years. The amount you receive is equal to 50% of your ex’s benefits. If you qualify for your own benefits, you either receive 100% of your benefit amount or 50% of your ex’s, whichever is higher. (3) The best part? Your ex never has to know you’re collecting spousal benefits. Social Security doesn’t notify them and you’re not required to reach out.
If your ex passes away, you receive benefits as a widow, which means you get 100% of your ex’s payout. There is one caveat to this rule, however. You won’t qualify for spousal benefits if you remarry. Your ex can, but you can’t. Although, if you happen to remarry and your second marriage ends in divorce or your spouse dies, you’d once again be eligible for your first spouse’s benefits.
For the Widows
Widows and divorcées who were married for at least a decade are eligible for survivor benefits when a spouse dies. Just keep in mind that you won’t qualify for survivor benefits if you remarry before age 60.
As with regular Social Security payouts, you receive reduced benefits if you claim them before you reach full retirement age. But unlike regular payouts, you don’t have to wait until you’re 70 to get the highest amount.
The chart below shows what percentage of survivor benefits you’d get based on your situation: (4)
Rely on a Financial Professional
Social Security is an intricate puzzle with many pieces, so attempting to go at it alone may not be the best course of action. To gain clarity and help maximize your benefits, it’s best to work with a financial professional.
Our team at Farrall Wealth can help you evaluate your options and choose a claiming strategy based on your unique situation. We are here to walk with you as you navigate Social Security, and the rest of your financial journey as well. If you’d like to partner with a financial planner who understands your unique needs and inspires you to be more confident in your financial decisions, call our office at 219-246-2516, email firstname.lastname@example.org, or schedule a complimentary consultation online. Be sure to visit our website to learn more and connect with us on LinkedIn, Facebook, Twitter, and YouTube.
Greg Farrall is CEO and owner of Farrall Wealth, an independent, boutique wealth management firm that is dedicated to helping women and business owners create customized financial plans that allow them to grow, protect, preserve, and distribute their wealth. Greg is known for being a problem-solver who walks his clients through whatever life throws at them. He prioritizes building long-term relationships and is passionate about going the extra mile for his clients so they can pursue their goals and live the lives they want. Greg has a bachelor’s degree in international business from the University of Wollongong in Australia and a bachelor’s degree in finance and marketing from Indiana University Bloomington. He is a Professional Plan Consultant® (PPC®) and a Certified Wealth Strategist® (CWS®) professional. And he recently received his Certified Plan Fiduciary Advisor (CPFA®) designation. You can listen to him on his financial literacy and business topic podcast, Money Matters with Greg, on iTunes, Google and Spotify. He’s also on YouTube, Twitter, and Facebook at @FarrallWealth.
Greg is a pillar of his community and served as the 2013-14 co-chair for the United Way campaign, through which he helped raise $1.8 million for 38 nonprofit organizations across Porter County, Indiana. He also served as president of the Valparaiso Rotary Club. Currently, he is on the advisory board for the Kelley School of Business and Dean of Students’ board at Indiana University. He also holds a position on the Culver Academies parents’ board.
When he is not working, you can find Greg spending time with his family or investing in one of his many passions, which include cooking, Spartan races, fly fishing, and meditation. To learn more about Greg, connect with him on LinkedIn.
Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.