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Have you factored Social Security benefits into your overall retirement strategy? Roy Kramer, CPA, CDFA, CDS, NSSA, a certified National Social Security Advisor and member, tax services at Brown Smith Wallace, discusses strategies that people often overlook when claiming Social Security benefits.
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10 Things You Should Know About Social Security Planning
There are several options on how and when to claim Social Security (SS) benefits. > Social Security Administration employees know the mechanics of applying for benefits but cannot advise on an optimal strategy.
Married couples have on average 10-12 options. > Combining delaying benefits to age 70 with “restricted application” and “claim and suspend” may result in maximum benefits.
A divorced spouse may collect spousal benefits. > a) Did the marriage last 10 years? b) Have the ex-spouses been divorced for at least two years? c) Are both you and your ex-spouse age 62 or older? d) A divorced spouse can choose among multiple ex-spouses to maximize benefits.
Life expectancy has steadily increased while rates of return on investments have decreased. Many retirees could potentially outlive their resources. The following factors may impact the decision to collect benefits at age 62: > a) Health c) Children b) Finances d) Continued employment
Give strong consideration to leaving maximum SS benefits to a surviving spouse. > The decision to take benefits prior to Full Retirement Age (FRA) might impact the amount received by a surviving spouse.
Claiming Social Security and taking withdrawals from taxable retirement plans can often inadvertently increase tax on social security. > Tax strategies are critical to maximize the benefits that are flowing through to your pocket.
Many retirees continue employment long past the “normal retirement age.” > Claiming your benefits before normal retirement age while continuing to work could force you to pay back some of your benefits.
A single person wishing to wait beyond FRA should utilize the “claim and suspend” strategy. > Using this strategy will provide a cash reserve if necessary.
Your employment earnings record on the Social Security website (www.ssa.gov) might be incorrect. > Setting up an account with Social Security and reviewing your information long before retirement is easy. Correcting errors can be time consuming and should be performed before applying for benefits.
How benefits are calculated: > Social Security benefits are computed by taking the highest 35 years of indexed earnings. Earnings after age 59 are not indexed for inflation but still count in the calculation. Zero earnings years also count in the calculation.
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For independent Social Security advice, contact:
Roy Kramer, CPA, CDFA, CDS, NSSAMember, Tax Services314.983.1265 | [email protected]
Disclaimer: The above list is not inclusive. Please consult with a qualified expert before making a decision regarding Social Security benefits.
