Social Security is based on a simple idea: pay for retirement benefits through payroll taxes levied on workers and employers.
But that’s where the simplicity ends. Prospective retirees need to consider how to maximize their benefits and those of their spouses. Even the age when benefits are first collected has a great impact on how much is received each month.
Here are a few tips from the Social Security Administration website and Shepherd Financial Partners, a Winchester, Mass., firm, that spotlight some of the points an advisor needs to communicate to clients planning retirement.
1. Choose a Date
How much a retiree receives each month varies greatly depending on what age Social Security benefits start. The longer one waits, up to age 70, the larger each check will be. The agency says that as a general rule, the total benefits a person receives will be the same no matter what age benefits begin.
2. Partners Count
If a husband or wife applies for benefits, the partner might be eligible for spousal benefits even if he or she never worked a job under Social Security. The rules are complicated, but in some circumstances a couple can draw more money than if each drew their own benefits. It’s worth checking out.
3. The Return of the Ex
And you thought once the divorce papers were signed you were free and clear. A divorced spouse is entitled to benefits if a few conditions are met. Some of those conditions are that the divorced spouse is unmarried, at least 62 and those benefits would be more than the person’s own Social Security payments.