Get What’s Yours: The Secrets to Maxing Out Your Social Security is a best-selling book written by two journalists and an economics professor. It was published earlier this year and offers advice of what to do, and what not to do, to maximize Social Security benefits. Those who were born between 1946 and 1953 should read this book soon, especially if they have not yet filed for Social Security benefits and they or their spouse have reached Social Security’s full retirement age.
The opportunity to use the potentially lucrative “file and suspend” strategy suggested by the book will end in April 2016. The loss of this strategy is part of the Bipartisan Budget Act of 2015 (H.R. 1314), which was adopted by the House a day before Speaker John Boehner yielded his position to new Speaker Paul Ryan, who said the deal was negotiated too secretly. Boehner agreed saying, “I’m in full agreement. It stinks. This is not the way to run a railroad . . . [but] Remember what the alternative was. The alternative was [either] a clean debt ceiling or a default on our debt.”
Critics ridiculed the compromise legislation as Boehner’s parting gift to President Obama because it removes the Republicans’ threat of a government shutdown for the remainder of Obama’s term, since the legislation increases caps on the debt ceiling in 2016 and 2017. As he signed the Act into law on November 2, Obama said, “There’s no better Christmas present for the American people, because this will allow the kind of stability and will allow the economy to grow at a time when you’ve got a great weakness in economies around the world.”
Analysts say that the Bipartisan Budget Act postpones a budget crisis for Medicare and recipients of Social Security Disability Income. Clearly, those who already receive Social Security benefits, which will not increase in 2016, will benefit because a steep increase in Medicare premiums was avoided. Those whose spouse or former spouse has not reached their full retirement age for Social Security before the end of this year have lost an opportunity.
Other than to alert those born between 1946 and 1953 who have not yet filed for Social Security that this window of opportunity is closing, my intention is not to be specific about an optimal Social Security strategy. It is too complex; and I am not among the few who are truly qualified to do so. Some people have been improperly advised by well-meaning financial advisors who are not really qualified either. Other than to correct a problem, it is probably neither necessary nor affordable to pay for an attorney’s help with Social Security, which the book says is best understood as insurance for the “worst case” of outliving your other income and savings.
According to the Social Security website, “Social Security programs are so complex that it is impossible to include information about every topic” in their handbook, which is too lengthy to make available in a printed format. It is available for free on line; but I am not among the few people who have read it thoroughly. Most employees of the under-staffed Social Security are understandably confused at times as well.
Contrary to what impression you might have when you speak to a Social Security employee, they are not supposed to give advice, but just information. The book’s authors are sympathetic to the plight of Social Security employees, who do their best to provide accurate information in response to the more than 3,000,000 requests that they receive each week; but the book cautions that incorrect information is often given. One tip is to document details of any phone call or meeting with Social Security, because specific and credible notes occasionally can be useful to reverse unfortunate decisions made because of incorrect information.
Philip Moeller, one of the book’s authors, writes regularly about retirement for Money magazine and for the PBS website. His analysis of the new law is that a person who is at least age 66 may continue to use the file and suspend strategy until April 29, 2016. He says that a person who does so may preserve the opportunity for a spouse and other qualifying family members, such as minor children, to be eligible to receive extra benefits now available by the strategy explained in his book.
Here is a taste of what his book explains. A file and suspend strategy at a person’s full retirement age will enable the primary income earner, who might or might not remain in the work force, to defer collecting Social Security benefits, thereby allowing their benefits to grow annually at a rate of 8% until age 70. Meanwhile, their spouse may claim up to 50% of their deferred benefit. This can result in a windfall worth tens of thousands of dollars.
The book cautions that timing matters, and that if the “wrong spouse” files first it can trigger what Social Security calls “deeming.” Deeming can restrict the ability of the first-spouse-to-file to claim the valuable spousal benefit of the second-spouse-to-file. Caution is urged to avoid unnecessarily filing for two benefits at once, which can prevent you from getting their full value.
Other tips within the book include how to maximize benefits by claiming in relation to an ex-spouse to whom you were married for at least ten years. It offers helpful information about benefits for widows and surviving minor and disabled children. It explains how The Senior Citizens’ Freedom to Work Act of 2000 permits working past the full retirement age without penalty. Although Social Security no longer sends annual statements, you can manage your account at www.ssa.gov, which actually is a great website.
It is not our intention to opine about what Social Security benefits should or should not be. But if you were born between 1946 and 1953 and want to “get what’s yours,” act now. Please don’t call us for help on this one. Read the book and follow its guidance before you contact Social Security.
by Dave Nesbit, Attorney