Friday, February 29, 2008

Some Great Ideas To Maximize Social Security Payments

Although it will be many years before we are qualified to receive Social Security benefits, I've noticed that there are quite a number of articles that examine ways to maximize payments. I don't know if I am just more aware or if financial planners are becoming more creative. Probably a little of both:-)

Previous articles I read discussed the maximizing of benefits for married couples waiting until 70 to start payments or the approach of using the spousal benefit for the younger person to increase total payouts. The recent articles I've read discuss how to claim benefits at 62 and then later increase ones benefits signficantly at the full retirement age of 70.

A hidden Social Security benefit by and Trade in Your Social Security Check by both share the following strategy:

  1. Starting taking reduced benefits at 62.

  2. Increase payments to maximum benefits at 70, by repaying all benefits received since 62.
This is allowed by using Social Security's form 521, "Request for Withdrawal of Application", returning all payments previously received, and then reapplying for new Social Security benefits. While this approach can be costly, it does allow one to receive signficantly higher payments because of being 70. Of course, many factors, including other sources of income and whether Social Security payments are taxable, need to be considered to determine whether this approach is an optimal financial solution.

All of these articles provide interesting insights on how to maximize the benefits from Social Security. As we get closer to qualifying for Social Security benefits, I will work with our financial advisor to do a more detailed analysis on what is best for our situation.

For more on Reaping the Rewards, check back every Friday for a new segment.

This is not financial advice. Please consult a professional advisor.

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