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Financial Planner: Rules of Social Security

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Last month I said I was going to talk a little bit about some of the more “obscure” rules of Social Security that many or possibly most people do not know about.

One of the first things I always want to assure people on is that even though the Social Security System needs revising, it is not on it’s last legs. For example, people hear about the “Trust Fund”, but that fund is still growing. We don’t have the 2017 numbers in, yet, obviously, but according to office of the chief actuary of the Social Security Administration, the balance of the fund grew by $35 Billion during the year 2016. Now, that doesn’t automatically mean that everything is just rosy, because the baby boom generation is really taking money out now. Yes, something needs to be done to repair the system, but there are ways to make it happen. We’ll just have to wait to see what the government ends up doing with it over the next few years.

I think a lot of folks, or maybe a majority of people understand that if you wait until you are a little older to take your benefit, the more it is. It increases by 8% per year for each year you delay the benefit, up to a maximum of 4 years, or age 70.

Many people don’t know that you can receive spousal benefits even if you are divorced. That benefit is the same as if you are married, but there are some rules. 1) The marriage must have lasted 10 years or more. 2) The person receiving the divorced-spouse benefit must be currently unmarried. 3) The Ex-spouse is at least age 62. & 4) If the divorce was more than two years ago, the ex-spouse does NOT need to have filed for benefits.

Now there are some interesting twists on this. Theoretically, that ex-spouse could have been married for 10 years to another spouse and then divorced. So BOTH ex-spouses can receive benefits on that same worker’s record AND those benefits paid to an ex-spouse do NOT affect those paid to the worker, the worker’s current spouse, or any OTHER ex-spouses.

Another little-known thing is regarding Survivor benefits. If both spouses are receiving benefits and one dies, the remaining spouse can receive the higher of the two benefits. A little thing to think about here is that you must TELL SS about the death and request the higher benefit. If they don’t know that someone has passed away, they don’t know to do the deal. Now, there are some RULES for survivor benefits. 1) The couple must have been married at least 9 months at the date of death, except in case of an accident. 2) The survivor must be at least 60 for a reduced benefit, or FRA for a full benefit. 3) The survivor benefit is not available if the widow(er) remarries before age 60, unless THAT marriage ends. 4) AND a DIVORCED-SPOUSE SURVIVOR benefit is available if the marriage lasted that 10 years we talked about earlier.

Now, the Social Security workers all know these rules, but they don’t know your particular situation, so you have to help them by giving them the info in order for them to do the best job for you. As always, check with your financial planner to get more info and to be sure that you are doing all the right things for your Social Security.

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