Navigating Social Security benefits takes more than a compass. And don't expect a lot of help from the Social Security Administration.
But that doesn't mean you can't find ways to maximize your benefits. Brett Horowitz of Evensky & Katz Wealth Management shared two little-publicized tips on social security benefits with The Huffington Post -- and they may just put an extra $40,000 in your family's bank account.
Tip 1: Filing a restricted application.
Scenario: Joe is 66 and eligible to collect monthly Social Security benefits of $2,100. But since he's still working and doesn't need the money, he plans on delaying his benefits until he is 70, which would ultimately raise his benefit amount and make him eligible for the government's 8 percent a year bonus, or credit, bringing his monthly benefit up to $2,772. His wife Mary is 68 and has been collecting Social Security since she was 62. She gets less than the $1,750 a month she would have gotten had she waited until she was 66.
What's the secret? Joe is allowed to collect half of Mary's benefit -- $875 a month -- from when he is 66 to 70. That comes to $42,000 for the four years and is pretty much found money, says Horowitz. What Joe needs to do is file a restricted application -- meaning restricted to his wife's benefits.
For those for whom the situation applies, disabled and minor children (up to age 16) are also eligible to receive half of a parent's retirement benefits.
Tip 2: File and suspend (also known as file and refile later).
Let's take the same set of facts as above, except Mary is also 66 and only gets $100 a month in benefits. If Joe wanted to wait until he was 70 to collect benefits, Mary would get her $100 and he would get $50 a month from filing a restricted application.
Or, instead of doing that -- and here is the secret -- as soon as Joe turns 66, he can file for his own benefits and suspend them immediately. Once he does that, Mary is eligible for spousal benefits based on Joe's benefits. Mary can get up to one-half of Joe's full retirement age benefit of $2,100 a month. So she goes from $100 a month to $1,050 -- an extra $950 a month or $45,600 over that four-year period.