Protect Your Social Security from Cyber Criminals

Posted on March 29, 2018 by James Lange in Current Events, Data Breach, Identity Theft, Social Security and tagged Fraud, Social Security, Social Security Fraud.

As many of you know, I am a strong proponent of waiting until age 70 to apply for Social Security, because I want both you and your surviving spouse to receive the highest benefit possible during your lifetimes. And one of the technical points about Social Security that I’ve never covered in detail in my books – because it’s only been in rare cases that I have recommended that my clients do it – involves applying for benefits retroactively. But in order to make you understand how your future Social Security benefits could be at risk from cyber criminals, I find myself in the strange position of having to give you a quick lesson on how retroactive benefits work.

Suppose that you could have applied for Social Security at your Full Retirement Age (FRA) of 66, but you took my advice and waited so that you can receive the highest benefit possible at age 70. When you turn 67, you go to your doctor for your annual physical. There, the doctor gives you some terrible news – you have six months to live! Now you’re cursing at me because you missed out on all of this Social Security money that you could have collected since you were 66 – or did you? Not necessarily. In certain instances, Social Security will allow you to apply for retirement benefits retroactively. If you qualify, Social Security will send you up to six months of retroactive benefits, paid as a lump sum.

A True Horror Story of a Social Security Fraud Victim

I won’t waste time telling you how you can qualify for retroactive benefits because it’s a complicated topic, and I will not recommend you do it because it will result in lower monthly benefits for the rest of your life. I am going to tell you something very important that you need to understand about retroactive benefits: if you are at least Full Retirement Age but are waiting until age 70 to file for Social Security so that you can earn Delayed Retirement Credits, your account may be compromised by cyber criminals who are trying to get their hands on any lump sum retroactive benefits to which you might be entitled, but have no intention of ever claiming. Here’s a real-life example of what I’m talking about:

I have a client who received an unexpected letter from the Social Security Administration. She and her husband had intended to hold off applying for benefits so that they could earn Delayed Retirement Credits. The letter they received, however, stated that Social Security had approved their request for a lump-sum retroactive benefit payment, which amounted to almost $12,000. Immediately my client and her husband went to their local Social Security office, and in the several hours spent there, discovered that the criminal(s) had called the office and pretended to be her husband. During the conversation, which was on a recorded line, the criminal simply said that he had changed his mind and wanted to apply for benefits retroactively! And the Social Security office complied with his request!

It Seems to Have Become Easier for Criminals

I found this situation to be so unbelievable that I called the Social Security office myself and asked how it could happen. What I learned might shock you. In order to access my client’s Social Security account, the criminals had to provide them with only the husband’s full name, date and place of birth, mother’s maiden name, and his current address and phone number. Personal information like this is widely available online through sites such as Facebook and Ancestry.com, not to mention what is available on the dark web thanks to the infamous Equifax hack in 2017.

My client spent hours at the Social Security office trying to put a hold on the “lump sum withdrawal,” and were assured that everything had been resolved. We thought that the criminals had been thwarted and everything was fine, but yesterday they received a 1099 from the Social Security Administration saying that they had received $12,000 in benefits that they needed to report on their tax return! So now we’re back to square one, and are still trying to get this mess sorted out. It’s bad enough that the IRS has been notified that they need to pay tax on money they never received, but now I’m wondering whether my client is still earning Delayed Retirement Credits after these criminals filed for benefits under his name!

How Can You Protect Yourself?

The bottom line is that you need to treat your Social Security account like a bank or investment account. Even though you might not think of it as being an asset, it is – because if a criminal manages to take control of it, the consequences could be costly and far-reaching. One way to protect yourself is to open an account with Social Security online, at this website: https://www.ssa.gov/myaccount/. Even if you do not plan to file for benefits in the near future, this action can prevent someone else from opening an account in your name without your knowledge. For your security you will be required to create a user name and password, and they’ll send a one-time security code to your email or phone.

Once you’ve established your account, you should check it periodically to make sure that information such as your name, address and phone number is correct. They also have a feature called “Block Electronic Access,” which prevents anyone (including you) from changing your personal information online or over the telephone. If you block access to your account and then change your mind, you have to ask Social Security to unblock it for you.
Years ago, the fear of Social Security theft was largely confined to the possibility of armed thugs waiting outside the bank for retirees who had just cashed their monthly checks. Unfortunately, criminals are constantly looking for ways to liberate you from your money, and their creativity can be surprising. Remember, protect yourself and your spouse by making sure that your benefits are safe – even if you don’t plan to apply in the near future!

Are you interested in learning more about Social Security maximization strategies? Visit our Social Security section of our website here for more information.

Four Ways Women Can Improve Their Outlook in Retirement

Posted on July 25, 2016 by James Lange in Retirement Planning, Retirement Planning for Women, Social Security and tagged pension benefit, poverty, Required Minimum Distributions, retirement income, Retirement Planning, Roth IRA, Roth IRA Conversions, Social Security, women.

Women and Retirement Lange Financial Group Pittsburgh PA

Recent studies have shown that women, even those who worked outside of the home, are much more likely to slip below the poverty line in retirement than men are.

Recent studies have shown that women, even those who worked outside of the home, are much more likely to slip below the poverty line in retirement than men are. Approximately 8 percent of adults aged 65 and older must rely on food stamps to survive and, of those, two-thirds are women. Why is there such a financial inequity between men and women in their golden years?

In years past, women typically earned much less than men (fortunately, this has started to change). Because they earned less than men, women were not able to save as much for retirement. Federal law establishes the maximum percentages that workers can contribute to retirement plans. Assuming that two workers both contribute the maximum percentage to their retirement plans, a male worker who earns $60,000 will save more dollars than a female worker who earns $40,000. Women must also make what they can save last longer. According to the Social Security Administration, the life expectancy of a man who is 65 today is 84.3. The life expectancy of a female, who is 65 today, is 86.6—a difference of almost two and one-half years.

Many women who are now retired are not as educated about finances as women of subsequent generations. They let their husbands manage the money, and frequently are unintended victims of poor decisions made by their spouses. This is especially true when considering both defined benefit pensions and Social Security elections. Retirees generally have the choice of applying for a higher benefit that lasts for their own lifetime, or a reduced benefit that is paid over the course of both their and their surviving spouse’s lifetimes. Many insist on applying for the higher benefit under the premise that they need a higher income to live on. If they are the first to die, though, their spouses are cut off completely. Many of the primary wage earners also make bad decisions when applying for Social Security benefits, never considering how their actions will affect their spouses. The decisions they make can mean a difference of about $25,000 in Social Security income every year, for their surviving spouses.

The good news is that, even if you are retired now, there are steps that you can take to improve your outlook in retirement. Consider some of these options:

1. If you are saving for retirement, take advantage of qualified retirement plans such as 401(k)s, 403(b)s, and IRAs. These plans offer tax advantages that, in the long run, will provide you with a much larger nest egg in retirement than buying identical investments inside a non-retirement account. Make sure that you manage the money that you do save, well. Many women are afraid to invest their money in anything other than CD’s, and never consider that the low rates of return they offer may cause them to run out of money before they run out of time.

2. If your spouse is entitled to a defined benefit pension when he retires, or if he will receive payments from an annuity, make sure that he chooses the payment option that covers your life as well as his own – especially if you are younger than he is. If he chooses the option that covers only his life, the payments will stop when he dies. If you can’t afford to live on the reduced benefit amount that covers both of your lives, then you can’t afford to stop working.

3. If your spouse earned more money than you did, ask him to think twice about applying for Social Security benefits at age 62. If he does, his benefit will be reduced by 25 percent for the rest of his life. Your spousal benefit, as well as your survivor benefit if he predeceases you, will also be permanently reduced. If it’s possible, encourage your spouse to wait until age 70 to apply for benefits. If he does, his benefit will be increased by 32 percent. If you survive him, the benefit you receive after his death will also be significantly higher.

4. Many women are not educated about financial and tax strategies they can use to make their money last longer. Consider making a series of Roth IRA conversions during the years after you retire, but before you start taking withdrawals or Required Minimum Distributions from your retirement plans. The money you save in a Roth IRA is not taxable, and so lasts longer than money that is in a traditional retirement plan.

It is important to remember that there is no one-size-fits-all answer to this problem. In order to make sure that you are financially secure, it is imperative that you contact a financial professional that you can trust and discuss these points in detail. A good fee-based advisor will be able to guide you through the best possible choices for pensions, Social Security, investment planning, and retirement expenses.

For more information about the financial challenges affecting women in retirement, please listen to our radio show at “Women Don’t Ask: How Married Women Can Advocate for their Own Financial Protection”

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Changes to Social Security Rules: File & Suspend vs Restricted Applications and Social Security Benefit Strategies for Married Couples

Posted on June 2, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Retirement Planning for Women and tagged apply and suspend social security, best Social Security for couples, Social Security, Social Security Benefits, social security spousal benefits.

The Little Black Book of Social Security Secrets, James Lange

The Little Black Book of Social Security Secrets evaluates options for collecting Social Security benefits and recommends the most advantageous strategies for them.

Changes to Social Security Rules: File & Suspend vs Restricted Applications and Social Security Benefit Strategies for Married Couples

Social Security Options after the 4/29 Apply and Suspend deadline

A couple of people who have written in want to know why I’m taking such a passionate interest in the changes to the Social Security rules. “What’s in it for you?” they ask. When I wrote The Little Black Book of Social Security Secrets, my plan was to make it available as a resource to my own clients. It received such an overwhelming response, though, that I quickly realized that I should make it available to as many people as possible – even though it’s unlikely that I’ll ever derive a benefit from doing so.

I am a CPA and an attorney, and my area of expertise lies in retirement and estate planning. As part of our services, we have always evaluated our client’s options for claiming Social Security benefits. Social Security is an integral part of retirement planning. If your income from all sources is high enough, your Social Security benefits will be taxed. Required minimum distributions from traditional retirement plans, which begin at age 70 ½, will compound that tax problem. It seems obvious to me that, if I want to give clients good advice about the money they will have available to spend during their retirement years, I must evaluate their options for collecting Social Security benefits and recommend what I believe are the most advantageous strategies for them. From the feedback I’m getting, though, it seems that many of the professionals in my field are quite happy to refer their clients to their local Social Security office for advice. Frankly, this is one topic on which I’m more than happy to hold the minority opinion!

But let’s go back and look at some real-life questions presented by people who have read my book, and who want to know what they should do with their own Social Security benefits. Ralph is 67, and hasn’t applied for Social Security yet because he wants his monthly benefit to grow by Delayed Retirement Credits (DRCs) of eight percent every year, and Cost of Living Adjustments (COLAs). His Primary Insurance Amount (PIA) is $2,400. His wife, Alice, just turned 65. She worked for most of her life, and her PIA is $1,800. What is the best Social Security strategy for this couple?

Social Security Options

Ralph has several options. If he files for his own benefit now, he would be eligible to collect about $2,600 (his PIA, plus the years’ worth of DRCs that he has already earned, plus COLAs) every month. He can also delay filing for benefits until age 70. Not filing will allow his benefit to grow by additional DRCs and COLAs, but he will need to file when he turns 70 because he cannot earn additional DRCs after that. Ralph can even change his mind. If he started to collect his benefit at age 67 and later regrets his decision, he can suspend his benefit and earn DRCs every month that his benefit is suspended, until he turns 70.

What about Alice? She is eligible to collect a benefit based on her own record, but, if she wants to collect it now, her benefit will be permanently reduced because she has not reached her Full Retirement Age (FRA) of 66. If she waits until she is 70 to collect her own benefit, the outlook is much better. Like Ralph, she is eligible to earn DRCs and COLAs on her own benefit. Her PIA is $1,800 and, if she waits until 70 to collect it, her monthly benefit amount will be about $2,400. If she is already collecting her own benefit, she can also suspend it when she reaches FRA and earn DRCs until she turns 70.

Spousal Benefits Give More Options to Married Couples

Ralph and Alice have been married for at least a year, so both have another option – Social Security spousal benefits. Even if Alice had never worked outside of the home, she would be eligible to collect spousal benefits based on Ralph’s record. The general rule is that spousal benefits can be paid as early as age 62, but they will be reduced. In order for Alice to receive the maximum possible spousal benefit – which is 50 percent of Ralph’s PIA – she must wait until 66 to apply. (Note, Social Security has something called a deemed filing rule, discussed below, that could affect whether she will receive her spousal benefit or her own benefit.) There is no benefit to Alice waiting beyond age 66 to apply for spousal benefits.

Ralph can also apply for spousal benefits based on Alice’s earnings record. Why would he want to, when his own benefit would be higher? There are some situations where it might actually make sense for the person whose own benefit is higher than his spousal benefit, to apply for the lower spousal benefit. We’ll cover more about that in a minute.

Suppose Ralph and Alice were divorced, and that only Ralph has remarried. As long as their marriage lasted at least ten years, Alice would still be eligible to file for spousal benefits based on his record. Does that mean that his current wife can’t get spousal benefits? As long as they’ve been married at least one year, his current wife can, when she is eligible, also file for spousal benefits based on Ralph’s record. Ralph could have been married four or five times and, as long the marriages lasted at least ten years, all of his ex-wives would be able to collect spousal benefits based on his record. The interesting part is that none of his ex-wives’ spousal benefits will be reduced because others are claiming on the same record!

How are Spousal Benefits Calculated?

The spousal benefit calculation can be complicated, so let’s look at an example. Let’s assume that Alice didn’t work much outside of the home, and that her PIA is only $400. Her full spousal benefit would be half of Ralph’s PIA, or $1,200. The difference of $800 is what is often referred to as the “spousal excess” – and the distinction between that and her PIA is very important if Alice wants to apply when she turns 62. If she does, and if Ralph is already claiming, she will receive 75 percent of her PIA ($300), plus 70 percent of the spousal excess ($560), for a total of $860. Of course, if Alice waits until FRA to apply, she’d get the equivalent of 50 percent of Ralph’s PIA ($1,200).

In our original scenario, though, Alice worked for most of her life and her own PIA is $1,800 – higher than the maximum spousal benefit to which she’d be entitled. Why would she apply for a spousal benefit if her own benefit is higher? We’ll cover the reasons why in the next section but, before we do we need to take a look at how much she’d be eligible to receive as a spousal benefit. If she applies at FRA, she’s eligible for the maximum – or 50 percent of Ralph’s PIA. Alice can certainly apply for benefits now, but her age (65) presents a complication. Social Security’s deemed filing rule says that, since she is not yet FRA (for our purposes here, 66), she will be “deemed” to be applying for both her own benefit and her spousal benefit. In other words, if she applies at 65, she has no choice – Social Security will figure out how much she would receive as a spouse, and how much she would receive based on her own record, and pay her the higher of the two. In this case, her own benefit, even reduced because she applied early, is higher than her spousal benefit. She’ll get $1,679 ($1,800 x 93.3%).

Maximize your Social Security benefits by Combining the Apply and Suspend Strategy with Restricted Applications

So how can Ralph and Alice use the options they have available to maximize the amount they receive from Social Security? Let’s look at some ideas.

Suppose Ralph is currently collecting his own benefit or that he applied for and suspended his benefit by the April 29, 2016 deadline. What happens if Alice waits one year, and applies for benefits when she is FRA (66)? If she waits until FRA, Alice’s application will no longer be subject to the deemed filing rule. She can submit her paperwork and specify that she only wants to apply for whatever spousal benefit to which she might be entitled. This is also known as filing a Restricted Application. Since she’s now FRA, she’d be eligible to receive 50 percent of Ralph’s PIA, or $1,200. She can collect her spousal benefit until she turns 70 and, in the meantime, the benefit based on her own earnings record will continue to grow by DRCs and COLAs. When she turns 70, she can switch to her own benefit, which will have increased by at least 32 percent – or, to almost $2,400 every month. Note, in order to be able to file a Restricted Application for spousal benefits, you had to have been at least 62 years old as of December 31, 2015. If you weren’t, you’ll be in the same boat as I am. We’ll be subject to the deemed filing rule regardless of when we apply for benefits.

Best Social Security Strategy for Married Couples

What does this mean in terms of money? If Alice applies for her own benefit at 65, she’ll receive about $1,679 every month, for the rest of her life. If she waits until age 66 to apply for just her spousal benefit – filing that Restricted Application – she’ll give up all the money she could have received from age 65 to 66 – a little over $20,000 ($1,679 x 12 months). Her spousal benefit of $1,200 every month will give her some income from the time she is 66 to 70, but not as much as if she’d applied for her own benefit at age 65. The difference between taking a spousal benefit and her own benefit during that four year period is significant – she’ll miss out on about $23,000 ($479 x 48 months). If you’re keeping track, she’s already missed out on about $43,000! But once she turns 70 and starts to receive her own benefit that has been increased by DRCs, the outlook is different. From that point on, Alice will get about $700 more ($2,400 – $1,679) every month than if she had applied at 65 – and she will get it for the rest of her life.

Confusing? You bet! But I hope you understood the general idea that, even though Alice collected no money when she was 65, and collected less money than she could have from the time she was 66 to 70, the handsome payoff that she received after she turned 70 made up for her sacrifice – and the payoff happened in a little over 5 years ($43,000 / $700 = about 61 months).

There is one catch. In order for Alice to be able to collect that 50 percent spousal benefit from the time she is 66 to 70, Ralph either has to be collecting his own benefit, or had to have applied and suspended by the deadline of April 29, 2016. Suppose Ralph is 70 years old but has not applied for benefits yet. He should go ahead and do so, because he won’t earn any more DRCs beyond this point. And once he files, Alice will be able to file a Restricted Application for spousal benefits.

Suppose Ralph just turned 66, and was not eligible to file for and suspend his benefit. Well, he can certainly apply for and collect his own benefit and Alice can file a restricted application for her spousal benefit, but then Ralph won’t earn those DRCs that can increase his check by 32 percent. Unless there were very unusual circumstances involved, it probably wouldn’t make sense for Ralph to collect when he is 66, just so Alice can get a spousal benefit for four years.

Suppose Ralph is 65, and Alice is 64 – so neither has reached FRA yet. Both are allowed to apply now, but, if they do, we know that each will receive the benefit based on his or her own record, and that their benefits will be permanently reduced. But what happens if they wait until next year, when Ralph turns 66 and Alice turns 65? Ralph can apply for his own benefit and receive his PIA of $2,400. Alice, though, has to be FRA in order to submit a Restricted Application for spousal benefits. If she waits until she’s 66, she’ll get the maximum spousal benefit of 50 percent. But because she restricted the scope of her application to her spousal benefit, she can collect about $1,200 every month until she turns 70. Once she turns 70, she can switch from her spousal benefit and collect her own benefit, which by now has grown to $2,400 every month.

In reality, these calculations are oversimplified. Before we make specific recommendations to our clients about Social Security, we take in to consideration such factors as life expectancies, income taxes, other sources of income, and COLAs. But the one thing I wanted to make sure you understood by these examples is that the ability to file a Restricted Application and collect spousal benefits might be able to provide one of you with a source of retirement income while your own benefit still continues to grow. And, as long as you were at least 62 years old by 12/31/2015, it is an option that you can take advantage of when you finally do apply for Social Security benefits.

My next post will give some additional examples of how Restricted Applications can be useful. If you have questions or comments, please feel free to write them below. Stop back soon!

Go to www.paytaxeslater.com/ss to get your free digital copy of The Little Black Book of Social Security Secrets, and then talk to a professional about your options before it’s too late.

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New Social Security Rules Causing Confusion Among Retirees

Posted on April 27, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Retirement Planning for Women, Social Security and tagged apply and suspend, file and suspend, restricted application, Social Security, Social Security Benefits.

What’s the deadline for filing and suspending? Should I do it online or in person? What’s the difference between Apply and Suspend versus Restricted Applications? Should I take Social Security now or wait?

Confusion among retirees with the new Social Security rules

We’ve been getting a lot of phone calls about the impending changes in the Social Security rules. Before I tell you about some of those calls, and explain how real people like you are dealing with potentially confusing Social Security decisions, I wanted to give you a quick update on some important dates.

Deadline for File and Suspend (or Apply and Suspend) for Social Security

If you plan to file for your own benefits and then suspend them, April 29, 2016 is an important date. If you file and suspend by that deadline, your spouse, when eligible, can then file for and collect spousal benefits from Social Security while your own continue to grow by Delayed Retirement Credits (DRCs).

Applying for Social Security Online or In Person

Many of the people we’ve talked to are concerned because they can’t even get an appointment with their local Social Security office until well after the deadline One way to apply is to call your local Social Security office before April 29, 2016 and schedule an appointment for after the deadline. The act of scheduling the appointment creates what is called a protective filing date, a concept which is covered in detail in my blog post of April 13, 2016. As I said in that post, I’m a little nervous about relying on a protective filing date. I am encouraging my own clients who are eligible, to just file online by April 29, 2016. I’ve had several clients report back to me that they applied online, and thought that the process was fairly simple. If you want to apply online, please note that there is no specific form that you need to fill out, that is titled “Apply and Suspend”. When you get to the very bottom of your application, there is a comment box. You need to write a comment in the box and say something like “It is my intention to file for and then suspend my benefits. I do not want to receive any checks until I turn 70.” That’s all that is required, but you do need to spell out your intentions very clearly. Please be sure that you print a copy of your application for your own records.

Apply and Suspend Vs Restricted Applications

Are you confused about whether Applying and Suspending is the best option for you? It’s not the right answer for everyone. My blog post of April 8, 2016 covers some situations where it might do more harm than good. One of those includes scenarios where it is more beneficial for one of the spouses to file a Restricted Application. Some examples of how Restricted Applications can be beneficial are covered in my blog post of April 22, 2016.

Is it Better to Take Social Security Now or To Wait?

Are you concerned about suspending your benefits because you were planning on using the money to live on? If you have been accumulating money in IRAs and retirement plans, it might actually make more sense for you to spend that money first, and allow your Social Security benefits to grow. This idea is covered in my blog post of April 12, 2016. This particular strategy isn’t for everyone, and there are so many variables to consider that we have to go through a lot of calculations before we can make specific recommendations about it. Do you think there’s a possibility that it might make sense for you to spend your retirement money first? If so, you should apply for and suspend your Social Security benefits now assuming that it is the right technique for you. Although we can’t possibly do it by April 29, 2016, we’d be happy to have our team do the math for you to see how spending your retirement money first might benefit you. If we find that you’re better off to spend your Social Security money and leave your retirement plans untouched, then you can always unsuspend your benefit.

We’ve had many calls from people who have questions about Social Security. Please check back tomorrow, when I’ll discuss some more of the real-life situations readers are wrestling with.

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Are you confused about how the Apply and Suspend strategies can benefit you? Please do not ask your local Social Security office for advice, because they can only present your options about government benefits! The decisions that you make about this affect far more than just your Social Security benefits, and could have unintended complications and/or repercussions if they are not made considering the big picture.

Getting your Social Security decision right is important, but it is even more important that you have the right strategies for all of your planning. To find out if your entire financial house is in order, fill out this pre-qualification form by clicking here to see if you qualify for a free consultation. Western PA residents only please.

Don’t delay. Go to www.paytaxeslater.com/ss to get your free digital copy of The Little Black Book of Social Security Secrets, and then talk to a professional about your options before it’s too late.

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Restricted Applications vs File and Suspend – Which is Best?

Posted on April 22, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Retirement Planning for Women, Social Security and tagged apply and suspend, file and suspend, restricted application, Retirement Planning, Social Security, social security spousal benefits.

Tony, 72, and Maria, 67 are both still working full time. Tony already applied for Social Security, Maria has not. Should Maria wait to apply?

Thanks again to all of you for your interest in my new book, The Little Black Book of Social Security Secrets. I’ve received a lot of questions about the best Social Security strategies for married couples, and my most recent blogs have given some examples where the File and Suspend strategy might be beneficial. Now I want to cover some examples for those of you who have two-income households, and who might benefit from filing a restricted application for benefits.

Tony, 72, and Maria, 67, read my book and wondered if they should reconsider their Social Security strategies. Both are still working, and full time. Tony applied for his benefits as soon as he was eligible, at age 62. Maria has not applied yet. Should Maria apply for benefits, or should she wait? This question, unfortunately, is not as straightforward as you might hope. Let’s look at all of the facts.

Filing a Restricted Application for Spousal Benefits

Tony is already receiving his Social Security checks, so he doesn’t have a lot of options. But what options does Maria have? Because she was Full Retirement Age (FRA) on December 31, 2015, she can file a restricted application for benefits and specify that she only wants to receive a spousal benefit. Her spousal benefit is a percentage of the benefit based on Tony’s earnings record. In order to be able to file a restricted application for spousal benefits you must be at least FRA, so in this case Maria will receive the maximum spousal benefit of 50 percent. Filing a restricted application for spousal benefits allows Maria to collect some income from Social Security while the benefit payable based on her own earnings record grows by Delayed Retirement Credits (DRCs). When she turns 70, she can switch to her own benefit if is higher than her spousal benefit.

Suppose Tony was only 60, and had not yet filed for his own benefit? Maria wouldn’t be able to file a restricted application for spousal benefits unless Tony has filed for his own benefit. She could apply for benefits based on her own earnings record, but then she’d miss out on those DRCs.

Suppose Tony is 67, and regrets that he started taking his benefits at 62. Can he suspend them without affecting Maria’s spousal benefits? The answer is yes, but only because we’ve changed Tony’s age and are now assuming that he’s 67. You have to be at least FRA, but not yet 70, in order to suspend your benefits after you’ve started collecting them. Why even bother then? Think about it for a minute. If Tony was able to suspend his benefit, the couple could still receive some income from Social Security (Maria’s spousal benefit), while at the same time allowing Tony’s to grow by DRCs. When he unsuspends them, Tony could receive a higher benefit amount, and for the rest of his life. (Don’t forget – if Tony wants to suspend his benefit, he needs to do so by April 29, 2016!)

Restricted Application Deadline

Many people have asked what the deadline is for them to file a restricted application, and unfortunately the answer is not as straightforward as for those who want to file and suspend. The rule is that, if you were at least 62 on December 31, 2015, you can file a restricted application when you reach your FRA. What if Maria is 63? In that case, she couldn’t file a restricted application for benefits right now, but she could do so when she reaches her FRA (for our purposes here, 66). What if Maria is 60? If she is, she will never be able to take advantage of this technique because she was not at least 62 on December 31, 2015.

In real life, my advice would not stop at telling Maria that she should probably file a restricted application. In the original scenario, Maria is 67 and is not collecting Social Security benefits of any kind right now. She could have filed a restricted application for spousal benefits as soon as she turned 66, and she wouldn’t have affected Tony’s benefit or the benefit based on her own earnings record at all. Maria’s missed out on a lot of money! The first thing I would tell her is that, when she files her restricted application, she should ask for retroactive spousal benefits. Retirement claims can be paid for up to six months retroactively.

Changes When Filing a Restricted Application

I’d also want to take a closer look at Tony and Maria’s tax picture, and point out some possible changes that they may not have considered. They have income from their jobs, income from Tony’s Social Security, minimum required distributions from his IRAs, and now they’ll have even more income from Maria’s spousal benefits. Just how bad will the news be for them on April 15^th?

Interestingly enough, Tony and Maria have some options available to them that non-working couples do not. Assuming that they don’t need Maria’s Social Security income to live on, I would ask them to consider putting that money right back in to their retirement plans at work. Most of you who read this column regularly know that, once you turn 70 ½, you are generally required to start taking minimum distributions (RMDs) from your IRAs. Some of you may not be familiar with the exception to the rule, though, that applies to individuals who are still working at that age. If you are still working, you are not required to withdraw money from your work retirement plan when you turn 70 1/2. You’re not required to withdraw anything from your work plan at all, until you stop working. There is an exception to this exception, and it applies if you own more than 5 percent of the company. If this is the case, you must take RMDs from your retirement plan at work when you turn 70 ½, even if you are still working.

Here’s another idea for those of you who are still working, and who have IRAs in addition to a work retirement plan. Assuming that the rules of your own plan allow it, you can roll any IRAs that you have in to your work retirement plan. You would not be required to take minimum withdrawals from the plan, or any of the IRAs that you rolled in to it, until you stop working.

Suppose Tony and Maria both work for a large employer, such as the local university? If they are still working, they can still contribute to their work retirement plans regardless of their ages. If they are not already contributing the maximum possible to their work retirement plans, they can use Maria’s new income from her spousal benefits to increase their contributions. If their employer offers them a choice of pre-tax and Roth accounts in their plan, they can allocate their contributions strategically once they have evaluated their short-term and long-term goals. Increasing their contributions to the pre-tax account might help their current tax situation, but increasing contributions to the Roth might be more beneficial in their later years. This is because, as of this writing, you are not required to take minimum distributions from a Roth account. And, if you do take distributions from a Roth account, they will most likely be tax-free.

Suppose Tony and Maria are self-employed, and have a SEP or a SIMPLE retirement plan for their business? In that case, they would fall under the 5% ownership rule, and must take minimum distributions from that plan when they turn 70 ½. But they still might be able to manage Maria’s new income from Social Security more effectively than by just allowing it to accumulate in the bank. If you have earned income, the IRS permits you to contribute to an IRA. In 2016, the annual contribution limit is $6,500. Assuming that Tony and Maria both earned more than $6,500 they could each contribute the maximum to an IRA. But wait! Isn’t it against the rules to contribute to an IRA after you turn 70 ½? Well, you can’t contribute to a traditional IRA after you turn 70 ½, but you are allowed to contribute to a Roth IRA regardless of your age as long as you meet certain income guidelines. So Tony could contribute to a Roth IRA, and Maria could contribute to either.

What if Tony became ill, and was no longer able to work? If Maria is still working, and assuming that she earns enough money, she can still contribute to her own IRA. She can also contribute to a spousal Roth IRA for Tony. The amount that Maria can contribute to both IRAs is limited to the amount of taxable compensation that they report on their tax return. But if she made more than $13,000 in 2016, it would be possible for her to put $6,500 in her own IRA, and $6,500 in Tony’s Roth IRA.

So what’s the bottom line? Even if you are worried about how collecting Social Security will affect your tax picture, you can minimize the impact – especially if you continue to work.

Please check back soon for my next post, which will answer some really complicated scenarios that readers have posed. Thanks for the questions!

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Are you confused about how the File and Suspend or Restricted Application strategies can benefit you? Please do not ask your local Social Security office for advice, because they can only present your options about government benefits! The decisions that you make about this affect far more than just your Social Security benefits, and could have unintended complications and/or repercussions if they are not made considering the big picture.

Getting your Social Security decision right is important, but it is even more important that you have the right strategies for all of your planning. To find out if your entire financial house is in order, fill out this pre-qualification form by clicking here to see if you qualify for a free consultation. Western PA residents only please.

Don’t delay. Go to www.paytaxeslater.com/ss to get your free digital copy of The Little Black Book of Social Security Secrets, and then talk to a professional about your options before it’s too late.

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What is the Best Social Security Spousal Benefits Option for My Spouse if I File and Suspend?

Posted on April 13, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Retirement Planning for Women, Social Security and tagged apply and suspend, best Social Security for couples, Social Security, Social Security Benefits, spousal benefits.

How Does Your Age Affect Your Social Security Spousal Benefits? What are the Social Security Spousal Benefits Changes in 2016? Find out more in this blog post.

I’ve been getting a lot of questions about what benefits, if any, your spouse is eligible for if you file for and suspend your own benefits by April 29, 2016. In order to answer them, I think it would be helpful to get a quick refresher on some points.

First, did your spouse work outside of the home? If so, it is possible that your spouse might be eligible for a benefit based on her own earnings record that is higher than the spousal benefit to which she is entitled based on your record. If this is the case with you, then you should check back tomorrow because I will be giving some examples that involve two-income households. Today’s discussion, though, will focus on scenarios where the spousal benefit amount that will be available to the wife is higher than any benefit to which she might be entitled based on her own record.

How Does Your Age Affect Your Social Security Spousal Benefits

This next point is really important. Don’t get Social Security’s terminology mixed up! If you were born between 1943 and 1954, your Full Retirement Age (FRA) is 66. This is the age at which you are first entitled to full (or unreduced) retirement benefits, but is not the age at which you’re first entitled to any benefits. The age at which you’re first entitled to any benefits is 62. If you apply before your FRA, your benefit amount is reduced. These general rules also apply to any spousal benefit that your spouse might receive.

Most of you seem to be pretty clear on the idea that you needed to be at least 66 in order to File and Suspend your own benefits by April 29, 2016. There seems to be a lot of confusion, though, about the benefits your spouse is entitled to if you do so. So, keeping the above paragraph in mind, let’s look at an example.

Social Security Spousal Benefits Options Available Under File and Suspend

Harry is 66, and has (or will) file for and suspend his own Social Security benefit before April 29, 2016. Because Harry is FRA, and because he acted (or will act) by the deadline, his wife Sally can collect spousal benefits when she is eligible. When can she apply, and how much can she get? It depends on how old she is now, and when she applies.

Let’s say that Sally was born in 1961, and is 55 years old. Sally’s FRA, in this scenario, is 67. In order for Sally to receive the maximum spousal benefit possible (50 percent of Harry’s Primary Insurance Amount (PIA)), she needs to wait until she is 67 to apply. That’s twelve years from now. She can apply for spousal benefits when she turns age 62 but, if she does, they will be reduced – only 35 percent of Harry’s PIA. The large difference in their ages is very important in this scenario. Even if she applies as soon as she is eligible, Sally cannot collect any spousal benefits until she’s 62 – or seven years from now. Harry will start collecting his own benefit when he is 70, which is only four years away. Because of the large difference in their ages, Sally cannot collect a spousal benefit at the same time that Harry’s is suspended. So in this scenario, there is no advantage to Harry applying and suspending his benefits.

Now suppose that Sally was born in 1955, and is 61 years old. In this scenario, her FRA is 66 years and 2 months. Because Harry acted by the deadline, Sally can apply for spousal benefits as soon as she is eligible – age 62, and while Harry’s are suspended. If she applies when she is 62, though, the amount that she receives will be reduced. What if she wants a higher benefit, and waits until her FRA to apply? Well, by the time she’s 66 years and 2 months old, Harry will be 72 – and he’ll be collecting his own Social Security benefit. If she waits, she will receive the maximum spousal benefit possible, but she just won’t be collecting them at the same time that Harry’s are suspended. So in this scenario, the benefit to Harry applying for his benefits and suspending them is debatable. If Sally had a terminal illness and was not expected to live until her FRA, she might want to collect what spousal benefits she can, while Harry’s are suspended. If not, I would probably advise Sally to wait until her FRA to apply.

What if Sally is the same age as Harry – 66? Since her husband acted by the deadline, and because she has reached her FRA, Sally can apply for and receive the maximum spousal benefit possible – which is fifty percent of Harry’s Primary Insurance Amount (PIA). The money that Sally receives from Social Security can provide the family with some income while Harry’s own benefit is suspended. And while Harry’s benefit it suspended, it grows by Delayed Retirement Credits (DRCs) and Cost of Living Adjustments (COLAs). When he finally does collect his own benefit at age 70, it will be significantly higher than if he had not filed and then suspended.

Social Security Spousal Benefits Changes in 2016

What if Harry doesn’t apply and suspend by the deadline? Well, Sally will be subject to the new rules whenever she finally does apply for her spousal benefit. The new rules say that she will not be able to collect a spousal benefit unless Harry is collecting his own benefit. So if Sally wanted to file for her spousal benefit at age 66, Harry must file for and collect his own first – and if he does, he’ll miss out on all those DRCs and COLAs.

Confused about which course of action is best for your family? You’re not alone. Unfortunately, the Social Security Administration, and the rare advisors like me who have expertise in Social Security planning, just can’t meet with everyone who needs help before the deadline. Some folks who have called their local Social Security office have been told that, even if they are not able to get an appointment by April 29, the date on which they call 1-800-772-1213 and schedule an appointment at least seven days in the future will establish what is called a protective filing date. According to their rules, your application filing date is considered to be 1) the date that a valid application is receive at any SSA office or online, or 2) the protective filing date. Theoretically, you should be able to call today, schedule an appointment in May, and when you go in for your appointment and apply you will be subject to the rules that were in effect the day you made the appointment.

I can’t stop thinking like a lawyer. My concern with relying on a protective filing date is that you can’t request a suspension of benefits until your application is actually filed. Will individuals who attempt to suspend their benefits based on a protective filing date be rejected on the basis that the actual suspension request was not received by the April 29^th deadline? Only time will tell. But since time is running out, I’m encouraging my clients who will benefit from it to just go online and file for and suspend their benefits. Unless you fall under one of the exceptions discussed in the previous post, there is no reason not to do so. Filing and suspending by the deadline will at least protect your ability to take action later, after you have had the chance to meet with a professional and discuss your options.

-Jim

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Should I take my Social Security benefits now or spend my retirement savings and apply and suspend?

Posted on April 12, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Social Security and tagged apply and suspend, file and suspend, Social Security, Social Security Benefits, when to take Social Security.

In my last post, I promised that I would answer some of the questions we have received in response to The Little Black Book of Social Security Secrets. So let’s have a look at some of the problems our readers are wrestling with.

Several readers have written and said that they are in a situation similar to this one:

My employer has just told us that the company has filed for bankruptcy and will be closing its doors later this year. I don’t know if I will be able to get another job at my age and, even if I do, I’m not sure I will be able to make as much money as I am making now. My spouse doesn’t work outside of the house. I was thinking about signing up for my Social Security benefits once the company closes, but then I read your book. I do have some savings in retirement plans (both traditional and Roth), and an investment account. When is the best time for me to apply for Social Security if I can’t find another job? Should I spend my savings now and apply for Social Security later, or should I save my money and apply now?

The loss of a job, especially at this point in your life, can be traumatic. Before we review the options that you have, let’s go through a quick refresher on two of the points covered in The Little Black Book of Social Security Secrets.

When Should You Take Social Security?

How does the age at which you actually collect Social Security affect the amount you receive? If you are now 62, your Full Retirement Age (FRA) is 66. If you wait until your FRA to collect your benefits, you will receive your Primary Insurance Amount (PIA). If you collect at 62, your monthly check will be permanently reduced, by 25 percent of your PIA. If you wait until you are 70 to collect, your check amount will be permanently increased by Delayed Retirement Credits (DRCs) of 8 percent per year (up to a maximum of 32 percent), plus Cost of Living Adjustments (COLAs).

When Should Your Spouse Take Social Security?

This next part is critical to understanding why you may have more options than you realize. If you file for your own benefit, even if you suspend them, your spouse will be permitted to file for spousal benefits based on your record as soon as she is eligible. When she files, though, is as important as when you file. If your spouse waits until her FRA (for most readers, this is 66), she’ll receive the highest spousal benefit possible – which is 50 percent of your own PIA. She is allowed to file as soon as she turns 62 but, if she does, she will only receive 35 percent of your PIA. In this case, we’re going to assume that your spouse is not entitled to a benefit based on her own earnings record. I have some examples for two-income households coming up in a later post.

The answer to the above question posed by my readers, therefore, will depend on how old both of you are. If you were or will be 66 by April 29, 20165, you should consider applying for and then suspending your own benefits by April 29, 2016. If your spouse is at least 66, that will make it possible for her to file for a spousal benefit that will be 50 percent of your own PIA. (She can file at 62, but her benefit will be reduced.) The spousal benefit will give your family some income from Social Security every month, while at the same time allowing your own benefit to grow by those DRCs and COLAs. Maybe you can’t get another job that pays as well as the one you have right now, but you might be able to get one that you enjoy a lot more – like working on a golf course – because your spouse now has a source of income that can make up the difference.

So what happens when you do get that pink slip? As tempting as it might be to just throw in the towel, you should continue working in some capacity if you are able to do so. A job will provide you with some income and, if you are able to secure spousal benefits by using the apply and suspend technique by the deadline, you just might have enough income to meet your expenses while still allowing your own benefits to grow. Are you too young to apply for and suspend your benefits by April 29, 2016? For most people, it is still preferable to delay claiming Social Security benefits for as long as possible. Many of my readers have some money in retirement plans (both traditional and Roth), and also some money in non-retirement accounts. How does the spending affect their decisions about Social Security? Which account should they spend first?

Should I Spend My 401(k) Money First?

For most people, it is better to spend your non-retirement accounts before your retirement accounts. The graph that follows is from my book, Retire Secure! It shows that, the longer you can leave your money in a tax-deferred (or tax-free) account, the longer it will last.

Should I take my Social Security benefits now or spend my retirement savings and apply and suspend?

When Should You Take Social Security benefits? Retirement questions answered from The Little Black Book of Social Security Secrets by James Lange CPA/ Attorney.

Once your investment account is liquidated, the question becomes complicated. You should spend your traditional and Roth IRAs strategically, depending on your own personal tax situation. What the heck does that mean? I wish there was a one-size-fits-all answer, but there isn’t. However, Chapter 4 of my book, Retire Secure!, does contain an extensive analysis of this topic, and includes specific examples that may provide you with some additional insight. If you’d like to learn more about why it’s so important to spend the right money first, you can get a copy of the book from this website.

If you don’t want to read the book, here are some general points to consider. You’ll be required to take withdrawals from your traditional IRA when you turn 70 ½, and those withdrawals will be taxable. Income generated from non-qualified investment accounts is taxable. If you have enough taxable income from other sources, a portion of your Social Security will also be taxable. Most retirees don’t plan for unavoidable changes in their tax situations, and their failure to do so can be very expensive. What we strive to do in our practice is find the spending and tax management strategies that makes your money last as long as possible. Ultimately, the solution is different for each client.

Readers, thank you for the question and please keep them coming! I love hearing from you! And check back soon to read about some more real-life challenges that people like you are dealing with!

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Confused about when you should apply and suspend Social Security? You’re not alone.

Posted on April 8, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Social Security and tagged apply and suspend, file and suspend, Social Security, Social Security Benefits, social security new laws.

What should I be doing about Social Security? Should I apply and suspend Social Security? Should I be collecting?

I want to thank everyone for the overwhelming response to my new book, The Little Black Book of Social Security Secrets. We’ve received an unprecedented number of phone calls and emails from readers who have read it, and who now realize that the choices that they make about Social Security can have an enormous impact on their retirement years. Many of you want to know if you’re making the right decision about when to collect Social Security, and have written with the specifics of your situation. Unfortunately, I just cannot answer all of your questions personally. But what I will try to do on this blog is address some of the major issues that seem to be of the most concern to my readers. Before I do that, though, I want to give you a general reminder.

Reasons you should not apply and suspend Social Security

If you are or will be least 66 years old by April 29, 2016, then you really should consider filing for and suspending your benefits on or before April 29, 2016. There are two situations where it might not be beneficial, and they don’t apply to a lot of people. But here they are. If you are contributing to a Health Savings Account (HSA), you need to know that filing for Social Security (even if you suspend your benefits immediately) will trigger your automatic enrollment in Medicare Part A. Once you are enrolled in Medicare, you can’t contribute to an HSA. The tax benefits of contributing to an HSA can be nice, but, unless your employer is currently making the contributions on your behalf, those benefits are generally eclipsed by the cash benefits of Social Security. If this applies to you, then you might want to talk to your Human Resources department to see if you might be eligible for alternative compensation.

The second reason you might not want to file for and suspend your benefits would be if there is a chance that you might want to later file a restricted application for spousal benefits. You can’t do both. So if you file and suspend, you will not be allowed to file a restricted application! We’ve actually had a lot of questions on this topic, and I do plan to give some detailed examples of how the restricted application works in just a few days.

What to expect if you do apply and suspend Social Security

But let’s assume that you are not contributing to an HSA, and you’re not planning on filing a restricted application. What happens if you file for your benefits and suspend them by April 29, 2016? Since you will not be receiving a check from Social Security, there are no income tax consequences that might surprise you next April. If you change your mind later and want to start receiving your checks, you can do so – and your check amount will be permanently higher than if you filed but did not suspend. Once you have filed, your spouse can apply for spousal benefits and collect them even while your own are suspended.

New hope for those who thought they were too young to apply and suspend Social Security

Were you born in May, June, July or August of 1950, and are cursing the fact that you’re just a little too young to take advantage of the file and suspend technique? Here’s an idea for you. After the book was published, we realized that there was a nuance not addressed in the legislation eliminating the file and suspend technique, which might enable more people to get in under the wire than we originally thought. This is because the Social Security Administration allows you to apply for benefits up to four months before you actually want to start collecting them. Does this mean that you might be able to take advantage of the file and suspend technique too? Unfortunately, no one knows for sure. If you fall into this category, I would suggest that you apply for benefits before you turn FRA – and by April 29, 2016 – and ask that they be suspended. At worst, they will tell you that the suspension didn’t occur until after you turned FRA – that is, after the deadline. And who knows, they just might say that your application falls under the old rules! The one thing I know for certain is that, if you wait until after April 29, 2016 to apply, the advantage for suspending will be lost. Under the new rules, your spouse will not be able to collect a spousal benefit unless you are collecting your own benefit.

I will start to publish some case studies soon based on questions that our readers have asked after reading The Little Black Book of Social Security Secrets. Stop back soon to see how real people like you are dealing with this important issue, and the best courses of action they have available to them. Remember, the decisions you make can provide your surviving spouse with a significantly higher guaranteed income, for the remainder of his or her life.

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Should you use the Claim Now, Claim More Later Strategy for your Social Security?

Posted on March 29, 2016 by James Lange in Little Black Book of Social Security Secrets, Retirement Planning, Social Security and tagged apply and suspend, claim now claim more later, file and suspend, restricted application, Social Security, Social Security Benefits, social security strategies.

The Apply and Suspend strategy will be eliminated on April 29, 2016, so you must act now to take advantage of it. For those of you who cannot use the Apply and Suspend technique, there is another way that you may be able to maximize your benefits, though, which involves filing a Restricted Application (also known as Claim Now, Claim More Later). The great news is that you can take advantage of this strategy until December 31, 2019, assuming that you were at least 62 years old as of December 31, 2015.

If both you and your spouse have worked over the years, and if both of you have applied for benefits, Social Security will look at your earnings histories before they pay a benefit to either of you. If it is more advantageous for you to receive a benefit based on your own earnings record, that’s the benefit that they’ll pay you. If it is more advantageous for you to receive a spousal benefit, which is 50 percent of what your spouse gets, they’ll increase your benefit to equal that amount.

Under the old rules, there was nothing that prevented someone for applying for benefits, but restricting their application to their spousal benefit. Why bother? There is a very important reason. If you tell Social Security that you are specifically applying for just your spousal benefit, your own benefit will be increased by Delayed Retirement Credits that equal 8 percent every year. When you turn 70, you are not eligible to earn any more Delayed Retirement Credits, but you can then tell Social Security that you want to switch to your own benefit – which presumably at that point will be higher than your spousal benefit.

This strategy can allow eligible claimants to collect up to $60,000 in additional Social Security benefits. In order to make it work, though, all of the pieces have to fall exactly in the place. At Full Retirement Age, which is 66 for our purposes here, the spouse who wants to take advantage of it must file for benefits and specify that he is restricting his application to spousal benefits only. He can then collect spousal benefits until he reaches age 70.

Let’s look at an example. Mike and Mary are both 66, and since they were born between 1943 and 1954, are Full Retirement Age for Social Security purposes. Mike’s Primary Insurance Amount (PIA) is $2,000 and Mary’s is $800 and, both can file for these benefits now since they are 66. But what happens if Mary is the only one who files for her own benefit at age 66? Mike can then file for benefits, but restricts his application to just his spousal benefits. He collects $400 (half of Mary’s PIA) and, between them, they receive $1,200 from Social Security every month. When he turns 70, Mike can switch and collect his own benefit. By then, his own benefit has grown by 8 percent plus cost of living adjustments every year. Instead of receiving $2,000 every month, he will receive $2,920. Better yet, Mary can also switch and receive a spousal benefit that is half of Mike’s PIA – or $1,000. By taking advantage of this technique, Mike and Mary have increased their Social Security income significantly – and they receive it for the rest of their lives.

In order for this to work, the person who is filing the Restricted Application must be 66 or older. You cannot collect spousal benefits using this technique if you are younger than 66. Keep in mind, too, that this strategy will be eliminated in 2020. As long as you were born before 12/31/1953, you will be allowed to file a Restricted Application as soon as you turn 66. If you were born after 12/31/1953, you can’t take advantage of this option.

Are you confused about how the Claim Now, Claim More Later or the Apply and Suspend strategies can benefit you? Please do not ask your local Social Security office for advice, because they can only present your options about government benefits! The decisions that you make about this affect far more than just your Social Security benefits, and could have unintended complications and/or repercussions if they are not made considering the big picture.

Getting your Social Security decision right is important, but it is even more important that you have the right strategies for all of your planning. To find out if your entire financial house is in order, fill out this pre-qualification form by clicking here to see if you qualify for a free consultation. Western PA residents only please.

Don’t delay. Go to www.paytaxeslater.com/ss to get your free digital copy of The Little Black Book of Social Security Secrets, and then talk to a professional about your options before it’s too late.

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Time is Running Out to Maximize Your Social Security Benefits

Posted on March 1, 2016 by James Lange in Little Black Book of Social Security Secrets, Social Security and tagged apply and suspend, bipartisan budget act, file and suspend, maximize Social Security benefits, restricted application, Retirement Planning, Social Security, Social Security Benefits, social security benefits for couples, social security spousal benefits.

There were two married couples, the Rushers and the Planners, with identical earnings records and investments. The Rushers didn’t read this book and during retirement, they ran out of money. Bad news. The Planners, however, took the time to read this short little book, implemented the recommended strategies, and when the Rushers were barely scraping by, they still had $2,013,881.

If you want to be a Planner and not a Rusher, please go to www.paytaxeslater.com/ss and sign up to receive your free digital copy of The Little Black Book of Social Security Secrets on the day it comes out.

Eligible married couples must act by April 29, 2016 to take advantage of the two strategies that will allow them to maximize their income from Social Security.

Why?

Because a certain provision buried in the fine print of the Bipartisan Budget Act of 2015 eliminates the two strategies: Apply and Suspend and Restricted Applications for Benefits.

If you are married and will be at least 66 by April 29, 2016, you should read this book to learn whether it would benefit you to apply for and suspend your benefits by the deadline.

Apply and Suspend works this way. You file an application for benefits at age 66 (or later) and then suspend them – meaning that you will not receive monthly checks. There’s good reason to consider doing this. For each year that your benefit remains suspended, it grows by 8 percent (up to a maximum of 32 percent), plus cost of living adjustments. When you finally begin collecting checks at age 70, they’re significantly higher than they would have been if you had begun collecting them at age 66 – and they stay that way for the rest of your life. If you change your mind and want to start receiving your checks after you’ve suspended them, you can do so at any time.

Better yet, your spouse will be eligible to apply for spousal benefits—which can be as high as 50 percent of your benefit at age 66—as soon as she is age 62. This will give your family some income from Social Security during the years that your own benefit is suspended. (If her own benefit is higher, then a different strategy should be used).

But you must Apply and Suspend by the deadline, April 29, 2016, to be grandfathered under the old rules. If you do not apply for and suspend your own benefits by April 29, 2016, your spouse will not be allowed to collect a spousal benefit unless you are also collecting your own benefit.

The second strategy, called a Restricted Application for Benefits, allows you to file for benefits and specify that you only want to receive whatever spousal benefit to which you might be entitled. Depending on your age, it could mean a monthly check as high as 50 percent of your spouse’s benefit, while your own benefit continues to grow by 8 percent, plus cost of living adjustments, every year. When you turn 70, you can then switch to your own benefit if it is higher than your spousal benefit.

If you were at least 62 years old as of December 31, 2015, you will be able to file a Restricted Application for Benefits. In order to file a restricted application, you must wait until your Full Retirement Age – which is 66 for those who will be able to take advantage of the strategy before it is eliminated.

Clearly, maximizing Social Security benefits is to your advantage. What many people do not realize is just how important it can be to the surviving spouse. If you are the higher earner and you make the right choices, your spouse will be eligible to receive a survivor’s benefit which, at maximum, will be as high as your own benefit amount. But, two of the strategies that you can use to maximize your benefits are being eliminated.

Don’t delay. Go to www.paytaxeslater.com/ss to get your free digital copy of The Little Black Book of Social Security Secrets, and then talk to a professional about your options before it’s too late.

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