When should you start taking Social Security Benefits

281-397-7777 Fax 281-397-7443 Financial Planning Tips When should you start taking your social security? "File and suspend" is a social security strategy that could work for you. When considering ways to maximize your social security benefits, one strategy often suggested by financial planners and touted in the financial media is called "file and suspend." Part of the Senior Citizens Freedom to Work Act, the "file and suspend" provision was added to the social security rules in 2000. For many folks, this strategy may provide a substantial windfall and increased lifetime income. Though the rules are complicated, the basic steps may be illustrated by the following example. Joe, who was born in 1953, is married to Sally. Throughout their married life, Sally worked part-time and Joe worked full-time, so Joe has a much higher lifetime income than Sally. He reaches full retirement age (for people born between 1943 and 1954, full retirement age is 66) and files for social security benefits. Joe's filing allows Sally to file for benefits based on Joe's work history. Under current rules, her benefits can total up to one-half of Joe's benefit. So if Joe is entitled to a benefit of $2,000 per month, Sally can start collecting benefits of $1,000 per month. Joe then "suspends" his benefit payments, postponing the collection of benefits until he reaches age 70. This strategy allows Joe to accrue retirement credits, which boost his future benefits by an average of 8% for every year that benefits are delayed. At age 70, Joe notifies the Social Security Administration that he wants to start receiving payments. Because of accrued retirement credits, Joe's monthly benefit has grown from $2,000 to $2,640 and Sally continues to receive her benefits of $1,000 per month. (This scenario ignores cost of living increases.) Sounds like a great deal. But like all financial strategies, this one carries risk and is based on certain assumptions. For example, it assumes that Joe is in relatively good health and will live a long life, long enough to reap the rewards of postponing his social security payments. It also assumes that current federal rules will remain in effect and that Joe and Sally have adequate resources to cover four years of expenses (age 66 to age 70) without relying on Joe's social security income. "File and suspend" is a strategy worth considering, but it may not be the best option for your family. If you'd like help analyzing retirement planning scenarios, give us a call. Joseph C Becker Ten Forty plus Quality Tax Preparation & Financial Services www.tenfortyplus.com 281-397-7777, Fax 281-397-7443 joeb@tenfortyplus.com