Optimizing SS and other retirement income
I recently flew to Kansas City, Mo., and met Mason Morasch and one of the IPG actuaries, who shared some of their strategies on Social Security optimization. This article will use some of their research. We will avoid using cost-of-living increases in SS benefits to simplify the case studies.
Case study: Joe and Mary are both age 66, which is the full retirement age for Social Security. Joe’s primary insurance amount is $2,500 per month of SS benefits, and Mary’s is $1,000 per month. If Joe waits until age 70, he will get 8 percent more for every year he waits past age 66, his FRA. This would make his SS benefit $3,300 per month at age 70.
Spousal benefit: Mary is entitled to either her SS benefits or half of her husband’s, whichever is greater, if she waits until she reaches FRA. If she takes SS earlier, she gets less. Joe will use the “file and suspend” strategy in order to get this spousal benefit for Mary. She can receive $1,250 per month, which is half of Joe’s $2,500 per month SS benefit at his FRA of 66. Because Joe is not claiming his SS benefits at age 66, he will receive the maximum he is entitled to, $3,300 per month at age 70.
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Holyoke Enterprise September 18, 2014