In Perspectives

In my most recent blog post, I gave a brief overview of the beginnings of Social Security and some factors that affect the decision of when to claim.  The key factors that we explored were health, availability of other assets, spousal benefits, and risk tolerance, however, for those who are or have been married there are more options and benefits of which you should be aware.

Spousal Benefits.  The primary rule on spousal benefits is that, if you are married, you can claim the higher of your benefit or half of your spouse’s benefit.  There is a penalty for claiming before your full retirement age (FRA), whether you will be claiming on your benefit or on your spouse’s.  You may remember from Part I of this blog series that you will be rewarded with an increased benefit if you delay claiming beyond your FRA, however, this is not the case if you will be claiming on your spouse’s record.  If your increased benefit at age 70 is less than half of your spouse’s benefit at their FRA, it does not make sense to delay claiming after your FRA.  However, you cannot claim on your spouse’s record until they claim on their own and you need to have been married for at least one year.

Survivor Benefits.  Once one spouse passes away, the surviving spouse keeps the higher of their own benefit or the deceased spouse’s benefit.  For this reason, a common strategy in deciding when to initially claim social security retirement benefits is to have the person with the higher benefit wait until 70 to claim so that the highest possible single benefit will have been achieved.  This strategy only works as long as there is enough cash flow to allow the delay in claiming.  In the below example, if Adam and Alice can delay Alice claiming her benefit until age 70, the surviving spouse will retain the monthly benefit of $3,779.14 (adjusted for inflation).  If they both claim at FRA, the surviving spouse will have a monthly benefit of $3,000.  To be eligible for the survivor benefit, you must have been married for at least 9 months before your spouse passed away.  Also, you can receive benefits as early as age 60.  There is no benefit to waiting past your FRA to claim the survivor benefit.

Age  Adam’s Monthly Benefit  Alice’s Monthly Benefit
62  $                        1,610.00  $                       2,100.00
63  $                        1,725.00  $                       2,250.00
64  $                        1,840.00  $                       2,400.00
65  $                        1,993.41  $                       2,600.10
66  $                        2,146.59  $                       2,799.90
FRA 67  $                      2,300.00  $                    3,000.00
68  $                        2,484.00  $                       3,240.00
69  $                        2,682.72  $                       3,499.20
70  $                        2,897.34  $                       3,779.14

Divorced Spousal Benefits.  If you are divorced, you can claim on your ex-spouse’s record if you meet certain criteria: you must have been married to them for at least 10 years, been divorced for at least 2 years, and are currently unmarried.  If you have more than one ex-spouse, you can choose on whose record to claim as long as you meet the previous requirements.  Similar to the spousal benefit, you can receive half of their full retirement age benefit and if you claim on their record before you reach your FRA, the benefit is reduced.  Also, you will not be rewarded with a higher benefit if you claim beyond your full retirement age.  Unlike the spousal benefit, your ex-spouse, on whose record you are claiming, does not need to claim on their own record first.

In addition to these situations, there are special rules for the caretaker of a dependent child (or dependent parent), divorced survivor benefits, taxation on Social Security benefits if you are still receiving wages, and it doesn’t end there.  There are many things to consider when deciding when to claim Social Security and each person and situation is unique.  The Wealth Advisors at Legacy Trust are a great resource to help you navigate the ins and outs of Social Security; please feel free to utilize their expertise.

Danielle Parmenter, CFP®
Associate Wealth Planner

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.


Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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