Welcome to September’s Minute on Wealth. I'm Mark Burgdorf, advisor at Burgdorf Wealth Managers in Fairview Heights. Today, we’re going to talk about maximizing your Social Security benefits.
Many advisors recommend waiting to claim Social Security benefits, which can boost monthly payments. But did you know there are other strategies that can impact your benefits, and that some depend on your marital status and your overall retirement income, assets and more importantly goals?
Let's start by understanding the basics.
There are three primary types of Social Security retirement benefits to consider:
1 - The Worker Benefit
This one's pretty straightforward. It's based on your own earnings history and becomes available after you've put in 40 quarters of work.
2 - The Spousal Benefit
If you're married, this is the benefit paid to your spouse. Non-working spouses usually get 50% of the working spouse's benefit. For working spouses, it's the greater benefit between their own benefit or 50% of the worker's benefit.
3 - The Survivor Benefit
This one is paid to the surviving spouse and can be as much as 100% of the deceased spouse's benefit, depending on the age of the widow or widower.
Now that you understand the basics, let's talk strategy number one - delaying your benefits until age 70. By doing this, you can potentially increase your monthly payments by 24%. And that doesn't even include any cost of living increases that might come along. However, again, this depends on your income needs and financial health.
Now, here's something you might not know: when it comes to widows and widowers, there's no spousal benefit. Instead, they qualify for a survivor benefit, which can be equal to 100% of the deceased spouse's benefit. This benefit is available as early as age 60, or even earlier in certain circumstances, like disability or caring for a child.
So, if you're widowed and you've also got your own worker benefit, you've got some choices to make. One option is to go for the benefit that offers the most substantial monthly amount.
Another choice is to kickstart your worker benefit at age 62 and then switch to the survivor benefit once you reach full retirement age. This can be especially handy if your benefits don't stack up as high as your spouse's. No need to delay here; survivor benefits don't earn delayed retirement credits.
Last but not least, you can consider beginning the survivor benefit at age 60 and then switching to your own worker benefit at age 70. This tactic lets you get some income rolling in early with the survivor benefit while giving your worker benefit time to reach its maximum potential.
Make sure you review your Social Security situation regularly and stay informed about any changes in the system.
These strategies could help you squeeze every drop of potential out of your Social Security benefits. It's all about making the right moves, especially if you're a widow or widower.
Planning for retirement can be complex, and these strategies might not apply to everyone. It's a good idea to consult with a financial professional who can tailor a plan that suits your unique situation. Here at Burgdorf, we can help you do just that.
If you want help with your retirement and Social Security strategies, contact the office today. See you in next month’s Minute on Wealth!