When to Claim Social Security with Mary Beth Franklin - YouTube

Mary Beth, you are married and you're of Social Security age.

I think everybody would love to hear the Social Security expert’s strategy on their Social

Security benefit.

Mary Beth Franklin: Well, it probably depends if you asked me before or after Congress changed

the rules.

Back in 2015, when Congress was passing some critical financial legislation to raise the

debt ceiling, they had to do it or the government couldn't pay the bills that had already incurred.

Without any public hearing or discussion, they attached amendments to that bill, that

changed the way we can claim our Social Security benefits, these two creative claiming strategies.

One was known as file and suspend.

It meant that if I waited until my full retirement age, to file for my Social Security benefits,

I could file for them, which would trigger benefits for my eligible family members, generally

a spouse, and then I could immediately suspend them so I wouldn't actually get a check but

my benefits would keep growing.

That was one creative claiming strategy.

Congress shut it down on six months’ notice.

They passed this law in November 2015 and said, "Six months from now, April 2016, anybody

who's 66 or older can use this strategy.

After that, nobody else can.”

But people who used it were grandfathered under the old rules.

Then they gave us a four-year phase-in for another valuable claiming strategy and that's

what's so important this year.

It says that people who are married or eligible divorced spouses, when they reach their full

retirement age of 66, could say to Social Security, "Don't pay me my benefit on my work

record.

Pay me only as a spouse.

That means give me half of my husband's full retirement age benefit or give me half of

my wife's full retirement age benefit while my own benefit continues to grow by 8% a year,

and at 70, I will switch to my own maximum retirement benefit.”

For married couples, this strategy can boost their lifetime benefits in terms of what they

both get while they're alive, and what the remaining spouse gets in terms of a survivor

benefit by $50,000, $60,000, $70,000 a year or more.

Lifetime benefits, not pre-term.

Casey Weade: Sure.

Mary Beth Franklin: You know, very, very valuable strategy.

But the key is now only people who turned 66 by this year, technically by January 1,

2020, means they can use this strategy.

People born January 2, 1954 or later, which includes me, cannot do this.

Now, I always joke that my face is on a dartboard at the Social Security Administration and

they do know what my birthday is so I don't think this is a real accident.

And I do apologize to anyone born in 1954 or later.

It's obviously my fault and I'm really sorry.

So, I can't use this double fancy strategy that my husband and I had planned to use initially.

So, our plan B is my husband is now 67 years old.

He has not yet claimed Social Security.

I turned 65 December this year.

I will wait until I turn 66.

In December 2020, I will claim my full retirement age benefit, at which point that triggers

a spousal benefit for my husband.

He will be 68 at the time.

He will use this strategy known as filing a restricted claim for spousal benefits.

That means I'm not claiming all my benefits.

I am restricting my claim to just spousal benefits.

He will get half of my full retirement age benefit for two years and then at 70, he will

claim his own maximum benefit, which will be 32% higher than it would have been when

he was 66.

And then depending on which one of us is the survivor, the bigger Social Security benefit

will continue and the smaller one will go away.

Casey Weade: Well, you're using a similar strategy as we're doing with my mom.

She's using her spousal benefit, delaying her own benefit until it's maxed out at age

70 and for some of these rules will still persist after this year for people like divorcees

for instance, correct?

Mary Beth Franklin: Well, people whether they're married or divorced, the key is you must be

born on or before January 1, 1954.

If you're born after that date, you will never be able to use this fancy strategy.

It goes away.

Casey Weade: So, are there any fancy strategies left?

Widows?

What options do we have?

Mary Beth Franklin: Yes.

Widows and widowers, regardless of their birth date, will still have the ability to collect

a retirement benefit first and switch to a survivor benefit later, or vice versa, whichever

would benefit them more.

You have to understand that retirement benefits on your own work record and survivor benefits

on your late spouse or your late ex-spouse’s work record are two different pots of money.

And you are entitled to choose when to claim them.

So, I'm going to give you an example from my own family.

My brother Bobby died 10 years ago this month, much too young and when his widow, Lillian,

turned 62 a few years ago, she asked me which Social Security benefit could she collect?

Should she collect her own retirement benefit or should she collect a survivor benefit?

And I said, “Well, you know, I know you're still working.

Are you making much money?”

“No, no, not really.

Since Bobby died, I just haven't felt like it”.

“Okay, whose benefit is bigger, your own retirement benefit or Bobby’s survivor benefit?”

“Oh, his is much better than mine.”

“All right, I want you to claim at 62 your own reduced retirement benefit.

You would get 75% of your full retirement age amount and if you make more than the earnings

restrictions, which in 2019, believe it or not, is $17,640 a year, you make more than

that, you start losing some benefits.”

I said, "Collect your own retirement benefit at 62.

Even if you lose some money to the earnings restrictions, don't worry about it because

when you reach your full retirement age of 66, you are going to switch to your survivor

benefits.

And even though your retirement benefits were permanently reduced, it has no impact on your

survivor benefits.”

And that's what she did.

But in those interim 10 years, she became a very successful real estate agent making

more than $100,000 a year.

Had she asked me that same question when she was making so much money, I would have said,

"Don't claim any benefits before your full retirement age.

You're making too much money.

You would lose them all, at least temporarily, to the earnings restrictions.

Don't do it.

But when you reach your full retirement age of 66, I still want you to collect your survivor

benefits because survivor benefits are worth the maximum amount at your full retirement

age.

They do not earn delayed retirement credits of 8% a year but your retirement benefit does.

I want you to collect only your survivor benefits at 66.

Let your own retirement benefits keep growing and if at age 70, your retirement benefits

are bigger, you're going to switch.”

Now, the reason this is so important is the Social Security Administration did an internal

random sample about a year-and-a-half ago, where they looked at the advice that Social

Security claims reps were giving people who are entitled to both the retirement benefit

and a survivor benefit and that random sample found out that in 82% of the cases, the claims

rep did not give the best advice.

So, it's really important for you to know what you're entitled to.