Nowadays with the improved health system and lifestyle, we are living longer. The problem is we are continuing beyond the retirement age with great financial difficulty. The current economic turmoil has proved that it is better to wait until we are at the retirement age of sixty six, maybe sixty seven prior to claiming social security benefit.
Claim and suspend
If you have started claiming then you have the option to suspend it for as long as you like, provided you do not need the finances now. Your spouse can also claim a spousal benefit, which typically is about fifty percent of yours. (The spousal benefit continues even if you suspend.)
By suspending, then delaying your own benefit, the amount you’ll eventually receive each month continues to grow at eight percent a year, until you’ve hit seventy.
And, if you die first, the higher benefit is passed on.
Only Social Security recipients at the retirement age and if they have never collected early benefits can use the claim-and-suspend strategy.
Claim now, claim more later
So, one of you (either the husband or the wife) receives a benefit and one of you has reached the retirement age, you can claim the spousal benefit but not your own. Therefore, you get around fifty percent of what your spouse receives. At the same time your own retirement benefit will grow at eight percent a year. When you reach seventy (which is when the amount no longer gains the annual increase), you can change from the spousal benefit to your own, if it’s larger.
How is this possible?
In the Senior Citizens Freedom to Work Act of 2000, these laws were passed to inspire people to remain working after their retirement age. One technique to accomplish this, explained Patricia Dilley, professor of law at the University of Florida and a former staffer on the House Social Security subcommittee, was to permit folks to obtain some level of retirement benefits whilst continually working.
You need to live long enough to make waiting extra years to take your benefits worthwhile. The benefit may affect your tax bill, so it is always wise to consult with a tax attorney prior to signing on to this agreement.
The benefits are great if you are married, but people with lower incomes, especially single older women, can’t afford to wait for higher aids. So, depending on your situation, this scheme can have substantial benefits.