In previous Social Security Talking Points installments, we laid the infrastructure to understand the various types of Social Security benefits and how you can help your clients to make this very important decision.  At this point, you understand Social Security eligibility, how benefits are computed, spousal/children/surviving spouse benefits, Annual Earnings Test, Restricted Application, three-legged stool for married couples and more.   

In this installment, we are going to discuss a few lighter topics – Do Over, Voluntary Suspension, Family Maximum and Filing for Benefits.  The purpose of this five-part series is to embolden the advisor to be proactive, not reactive in assisting clients with their Social Security options.  You are your clients’ trusted advisor.  Are you prepared for your clients’ Social Security questions?

Do Over and Voluntary Suspension

There are a couple of strategies that allow your clients to either withdraw their Social Security benefit application or to suspend their benefits.

Within twelve months of beginning benefits your clients can file Form SS-521 to withdraw their Social Security application.  This strategy is known by the very technical term of the “Do Over”!   Your client is required to repay all benefits received to utilize this strategy.  After benefits are repaid, your client’s Social Security application will be withdrawn, allowing your client to file later.   This strategy may be useful when a client files at age 62 due losing a job and then within 12 months becomes employed.  In this situation, your client can utilize the Do Over and then refile at a later time.

(Marc Kiner is the co-author of 2017 Social Security and Medicare Facts, published by The National Underwriter Company, a division of ALM Media, and available for purchase here.)

After twelve months have passed, the Do Over strategy is not available.  In this situation, you client upon reaching Full Retirement Age can voluntarily suspend his or her benefits.  During the suspension period, your client will not receive any benefits but will earn Delayed Retirement Credits.  By suspending benefits and waiting to age 70 to resume, will increase your client’s benefits to a level close to their Primary Insurance Amount.  This strategy is generally not suggested when a spouse or children are collecting off the wage earner as their benefits will also be suspended.

The Advisor’s Role – understand the opportunities to utilize the Do Over and Voluntary Suspension.

Family Maximum

Social Security rules place a limit on the amount of benefits that can be paid off an individual’s record.  This limit is called the Family Maximum and applies to the worker, current spouse, and children.  The Family Maximum does not apply to ex-spouses.  The family maximum will generally apply when more than two individuals are collecting off the number holder.  The Number Holder is the individual on whose record benefits are being filed under.  Thus, if Samantha is filing for spousal benefit off of Harry, then Harry is the number holder.    As a general rule, multiply the number holder’s PIA by 1.75 to determine the family maximum.  Assuming your client’s PIA is $2,000, the family maximum would be $3,500.  The number holder will receive his or her PIA of $2,000.  The remaining $1,500 will be split equally among others (spouse, kids), collecting off the work record.  If one spouse and one child, they each will receive $750.  If two kids and one spouse, benefit to each would be $500.  Please keep in mind that the maximum payable to a child or spouse is 50% of the number holder’s PIA.  Thus, if only one spouse or one child is collecting the family maximum will never be an issue.

The Advisor’s Role – understand that when the Family Maximum will apply and guide your clients in this situation.

Filing for Social Security Benefits

Basically, there are four ways to apply for Social Security retirement benefits.

  1. Online (our recommendation)
  2. Visit the local SS office without making an appointment.  (Bring a good book.)
  3. Call the SS toll free number 1-800-772-1213 to schedule an in office appointment.
  4. Call the SS toll free number 1-800-772-1213 to schedule a return phone call.

As you can see, we recommend that your clients file for benefits online.  A fairly simple process.  Just visit www.ssa.gov and the lady in the blue sweater will take your application.  Not really, just find the lady in the blue sweater and your clients will be on their way to filing for benefits.  Filing online is our suggested method because it does involve speaking with a claims representative at your local Social Security office.  Frequently, claims representatives do not understand the filing strategies and do not complete the correct applications.  Your clients can avoid speaking with a claims representative by filing online.  Some applications cannot be completed online such as a supplemental application, children benefits, and surviving spouse benefits. 

Filing for an individual’s benefits along with spousal benefits can be completed online.  As the online application can be a bit tricky you should help your clients through this process.  We cover filing online during our day long National Social Security Advisors certificate training.  Please visit www.premiernssa.com for a schedule of upcoming classes and webinars along with information on our ondemand videos.

Your role – understand the various ways to file for Social Security benefits and take a hands-on approach to helping clients to file online.

In this fourth installment, we covered lighter topics – Do Over, Voluntary Suspension, Family Maximum and Filing for Benefits. In the fifth and final installment, we will review the provisions impacting public employees and my favorite topic, the taxation of Social Security benefits. After all, I am a CPA!

With 76 million baby boomers understanding Social Security is imperative. You are the trusted advisor. Take the time to learn!

(Marc Kiner is the co-author of 2017 Social Security and Medicare Facts, published by The National Underwriter Company, a division of ALM Media, and available for purchase here. Kiner is also the co-founder of National Social Security Advisors, LLC, which provides education, training and certification for Social Security consulting.)

— Check out other Social Security Talking Points installments by Marc Kiner.