THE EVERETT ADVOCATE – FRiDAy, SEpTEmbER 13, 2024 Page 19 Social Security Benefits M any people should seriously consider delaying the filing for social security benefits. Why would someone want to do this? This helps to protect against one of the greatest risks to retirement income- living to an age longer than you originally anticipated. Longevity risk is one of the biggest obstacles that financial planners face today. Life expectancies continue to rise due to all of the medical advancements over the last 100 years. If you were to consider a married couple each of whom is 65 years of age, there is a 50% probability that one of them will live to age 92 and a 25% probability that one will live to the age of 97. Historically speaking, a low interest rate environment is more likely to lead one to delay receiving social security benefits. Although bank interest rates are high right now, as well as shortterm Treasuries, the guaranteed 8% increase for each year you delay your social security benefits is something to take note of. Furthermore, with the Feds ready to lower the federal discount rate this September, maybe two more times before the year ends, and possibly several more times in 2025, the high interest rate environment might change rather quickly. The United States Congress had abolished the “file and suspend” strategy. This involved someone who would file for social security benefits and then immediately suspend those benefits. Once you filed for social security benefits after reaching the age of 66, your spouse would then be entitled under the law to receive 50% of your benefit. Once your benefits were suspended, your spouse would continue to receive a social security benefit equal to 50% of your benefit amount. Once you suspended your benefits, each year thereafter your future social security benefits would increase by 8%. This was simply found money for the couple. Furthermore, if your spouse had a work history of his or her own, by collecting under your benefit amount, future social security benefits based upon his or her own work history would continue to grow as a result of delaying collecting benefits under his or her own work history. Your spouse could then wait until age 70 and then start collecting based upon his or her own work history. At that point in time, the monthly benefit would be a lot higher. Keep in mind that the spousal benefit is still available. This benefit provides a social security benefit to the non-working spouse equal to 50% of the social security benefits of the working spouse. This is true even if the non-working spouse never had earned income and therefore never contributed into the social security system. The restricted filing strategy was also available. You had to have been born prior to January 1, 1954. This strategy worked well if both spouses had a significant work history. You had to have been at least 66 years of age or older to take advantage of this strategy. You could claim social security benefits based upon your spouse’s work history while simultaneously allowing social security benefits based upon your own work history to continue to accrue delayed retirement credits until age 70. Once you had reached age 70, you could then collect social security benefits based upon your own work history. Now, anyone born prior to January 1, 1954 has already turned 70 years of age, so this strategy is no longer available. You should always have in mind the feasibility of maximizing the monthly social security benefits of your surviving spouse. If one spouse dies, the surviving spouse might not be able to survive on just one social security check each month. The survivor benefit feature of social security allows the surviving spouse to collect the higher of his or her own social security benefit based upon his or her own work history, or 100% of the deceased spouse’s monthly social security benefit. Delaying social security benefits until age 70 would provide for the highest monthly social security benefit for your spouse if you were to die. If you are divorced but the marriage lasted for at least 10 years, and you did not remarry, you would still be eligible to receive 50% of your former spouse’s social security benefits while your former spouse is still alive and 100% of your former spouse’s social security benefits if your former spouse is deceased. You can remarry after you reach 60 years of age and not lose any benefits based upon your former spouse’s work history. In this case, your former spouse need not even have filed for social security benefits. You can still file for social security benefits so long as you were married at least 10 years. Joseph D. Cataldo is an estate planning/elder law attorney, Certified Public Accountant, Certified Financial Planner, AICPA Personal Financial Specialist and holds a masters degree in taxation.
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