An Index Overview Part IV: Index Investing – Opportunities and Obstacles
Written by Andrew Hunt
Written by Jason Hiley
Widows nearing retirement may be able to utilize one of two lesser known “claim and switch” Social Security election strategies in order to increase total lifetime Social Security benefits by as much as six figures. More information regarding the basic rules and requirements of survivor benefits can be found in the article Social Security Survivor Benefits.
Claim and Switch Strategy #1:
Claim your worker benefit at 62 and switch to your survivor benefit at 66
This strategy works best for a widow who has a benefit available on her own work record that is substantially less than her survivor benefit.
Jane is a widow planning to retire at age 62, and she would like to begin drawing Social Security.
|Jane’s Age||Worker Benefit||Survivor Benefit|
Given Jane’s life expectancy, she will receive greater lifetime benefits if she waits until age 66 to claim her survivor benefit. Jane can file a restricted application at age 62 to receive only her worker benefit ($900). At age 66 she can amend her claim to begin receiving 100% of her survivor benefit ($2,000).
Using this approach, Jane will receive $900/month from age 62-66 and $2,000/month until her death. Utilizing this little known “claim and switch” strategy, Jane will collect an additional $43,200 in lifetime Social Security benefits.
Claim and Switch Strategy #2:
Claim your survivor benefit at age 62 and switch to your worker benefit at age 70
This strategy works best for a widow with a benefit available on her own work record that is close to, or greater than, her survivor benefit.
Mary is a widow planning to retire at age 62, and she would like to begin drawing Social Security.
|Mary’s Age||Worker Benefit||Survivor Benefit|
Given Mary’s life expectancy, she will receive greater lifetime benefits if she waits until age 70 to claim her own worker benefit, as her worker benefit will have grown through delayed retirement credits. At age 62, Mary can file a restricted application (a widow could do this as early as age 60) to receive only her survivor benefit ($1,458). At age 70 she can amend her claim to begin receiving her own worker benefit ($2,640).
By utilizing this claim and switch strategy, Mary will collect an additional $140,000 between the ages of 62-70 as compared to a strategy of simply delaying Social Security to age 70.
Consult a Professional
Unfortunately, most people make Social Security decisions without consulting a professional. You may be surprised to learn that the Social Security office is not allowed to give advice on strategies that would help maximize your potential benefit. An expert in Social Security planning can take into account variables such as your current age, life expectancy, and financial assets in order to help you identify an election planning strategy best suited to maximize your lifetime Social Security benefit.
Don’t miss out on tens if not hundreds of thousands of dollars in lifetime Social Security benefits by making an uninformed decision. Call or email us today to arrange a time to discuss your unique situation.
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