For many older Americans, Social Security is an essential source of retirement income. If you are nearing retirement age, you may expect to rely on these monthly benefits, based on income earned throughout your working life. As you near retirement age, it can feel like everyone has an opinion about when or how you should choose to take your Social Security benefit. However, contrary to popular wisdom, not every retiree should begin taking his or her benefit at the earliest eligible age. Each case is different and depends on the health, life expectancy, financial resources, and spouses of any given Social Security beneficiary.
Undoubtedly, you have heard about various ways your peers have worked the system to eke out the most benefit possible. Although Congress eliminated one of the more popular “loopholes” in 2016, there are still a few ways you can maximize your retirement benefit.
FAASF Lives On for a Few More Months
File as a Spouse First (FAASF) is one such way to maximize Social Security benefits. Although this method was also eliminated in the 2016 law, certain Americans were “grandfathered in” and allowed to continue utilizing this tool. FAASF enables an eligible person to choose to delay receiving his or her own Social Security benefit and instead claim a spousal benefit. By doing so, the eligible person can allow his or her Social Security benefit to continue to grow, taking advantage of delayed retirement credits. Furthermore, benefits can be increased by as much as 32% for life.
This tool won’t work exactly the same way for every couple, but here’s how it works best:
Upon reaching full retirement age, the higher-earning spouse delays his or her own Social Security benefit and instead takes a spousal benefit under the lower-earning spouse’s Social Security. In the years before the higher-earner reaches the required distribution age of 70, he or she will receive a modest spousal benefit while his or her own benefits can continue to grow (by accumulating delayed retirement credits). When the higher-earner turns 70, he or she will receive a monthly distribution that is larger than if he or she had taken the benefit at full retirement age. Utilizing this tool also allows for the increased benefit to live on after the beneficiary’s death: if the higher-earner dies first, his or her larger benefit will be passed to the surviving spouse.
Who is Still Eligible to Benefit from FAASF?
Because this tool was eliminated in 2016, only certain individuals are allowed to utilize FAASF. Anyone who turned 62 before January 1, 2016 is grandfathered into the FAASF loophole. This means, if you have not yet filed to receive your Social Security benefits and you were born before December 31, 1953, you may be able to make use of this rapidly expiring tool.
So, if you are turning 66 this year or next and you haven’t yet filed for Social Security benefits, you have the option to file as a spouse first. Not everyone will find that this method results in increased monthly benefits, but it might, and it could increase your monthly benefit for life.
Ask for Help Understanding Your Options
It is common for older Americans to do whatever they can to make the most of the Social Security program. However, what is right for each individual is determined by very personal factors including health, income earned over a career, and marital status. If you would like to talk through your options and determine what is right for you, contact Brian M. Douglas & Associates. We would be happy to help.
