Social Security Strategies Vital in Financial Planning…
…Especially in Financial Planning for Divorcee’s!
First and foremost, Social Security protects against longevity risk. Social Security may be the most misunderstood element in your financial plan. This can result in:
- Taking Social Security at the wrong time
- Not taking advantage of Social Security strategies
- Not understanding Social Security availability
According to the Social Security Administration, 72% of current recipients receive reduced benefits because they started benefits too early. Financial planners can show you how to delay Social Security payments, and in some cases, receive a 98% increase in your Social Security payments.
Two Favorite Social Security Strategies
The first is called ‘File and Suspend Application’:
The higher-earning spouse files for Social Security retirement benefits at full retirement age. The lower-earning spouse also files for spousal benefits based upon the earning records of the higher-earning spouse (up to 50%). Higher-earning spouse then withdraws his/her Social Security application and repays any benefits received (period limited to one year). Even though the higher-earning spouse withdraws his/her application, the spousal benefit continues!
The second strategy is called ‘File and Switch’:
Lower –earning spouse files for own Social Security retirement benefits (as early as age 62). Upon the retirement of the higher-earning spouse (as late as age 70), the lower-earning spouse applies for spousal benefits (as much as 50% of the higher-earner’s rate), assuming the spousal benefits are higher!
When financial planning for divorcee’s, it is important to know that if you have been married for at least 10 years, you are eligible for spousal benefits!