5 Things You Need To Know About Social Security

| August 02, 2015
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You already know Social Security is complicated and comes with lots of rules. These rules can produce millions of possible withdrawal strategies, but it's still hard to know what rule applies to a particular situation. While there may be thousands of rules, here are 5 that are important to know:

  1. The Primary Insurance Amount (PIA) is also called the full retirement benefit. You are more likely to understand the latter term. It is the benefit amount you receive at your full retirement age. It's also a snapshot in time: If you continue to work and contribute to Social Security, the PIA (and, hence, benefits) will increase over time.

  2. The "deemed filing" or "deemed application" rule is important! This little-known rule states that if you are not full retirement age and file for a spousal benefit, you are deemed to also be filing for your own benefit if eligible for one. Until you reach full retirement age, you cannot choose which to receive if you're eligible for both. Instead, you get the higher of the two—and you can't switch at a later date.

  3. Only one spouse can receive a spousal benefit at any given time. There are some complex spousal switching strategies coded in our tool, but it won't let both spouses collect spousal benefits at once.

  4. Spousal benefits will never be greater than ½ of the primary beneficiary's full retirement benefit amount. Spousal benefits do not accrue delayed retirement credits. Bottom line: It never pays to wait beyond full retirement age to begin a spousal benefit if your client is eligible to do so at full retirement age.

  5. You must be full retirement age to file and suspend. This strategy is becoming more common, but it is only an option if you have reached full retirement age.

Knowing these basic rules will help you stay ahead of the curve on understanding Social Security benefits. If you want to give yourself or your family the best chance of maximizing Social Security, be sure you are using an advisor who understands Social Security and uses software to help maximize solutions for your specific situation.

Darwin J. Lindsey

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