Suze Orman’s Lame Social Security Advice

Over the past few years, the Social Security Administration (SSA) seems to have dramatically expanded its marketing budget. SSA is constantly putting out blog posts and other communications, primarily focused on enhancing its brand and trying to persuade us that it cares deeply about the members of the public it exists to serve. Read more…

Social Security Survivor Benefits: More Bad Advice from SSA

Over the past year I find myself increasingly being asked to assist in damage control. In many of those situations the damage has been inflicted by the Social Security Administration itself.

Case in point: having just read the May 31 SSA blog post entitled The Importance of Social Security Survivors Benefits http://blog.socialsecurity.gov/the-importance-of-social-security-survivors-benefits/, I sensed my blood pressure beginning to rise. Two different items set me off, one simply misleading and the other downright dangerous.

The misleading statement reads as follows: “The amount of benefits your family receives depends on your lifetime earnings. The higher your earnings are, the higher the benefits will be.” Obviously there is some truth to the foregoing statement, but it is misleading in at least two respects.

1. If the worker died after claiming his or her benefits before Full Retirement Age, then his or her surviving spouse could receive significantly less than the surviving spouse of a lower earner. Survivor benefits are most often equal to the retirement benefits the worker was receiving at the time of death.

Example: Worker A had a Primary Insurance Amount (PIA) of $2,000. He died at age 71, having delayed claiming his benefits until age 70. His widow was potentially eligible for survivor benefits of $2,640.

Worker B had a PIA of $2,600. He died at age 71, having claimed his benefits at age 63. His widow was potentially eligible for survivor benefits of $2,145.

2. The deceased worker’s earnings and date of claiming determine the maximum possible survivor benefits. However, the age at which the surviving spouse claims survivor benefits determines what percentage of the maximum possible benefit amount will actually be payable.

Example (continuing): Worker A’s spouse claimed survivor benefits at Full Retirement Age (66 in this case) and became entitled to receive $2,640 per month. Worker B’s spouse claimed survivor benefits at age 60 and receives $1,859 per month.

The dangerous statement reads this way:

“When a worker dies, we recommend that their survivors apply for benefits right away. You can apply by telephone or at any Social Security office. For more information about survivors benefits, visit www.socialsecurity.gov/survivors. If you think you qualify, please don’t wait. Apply today.”

Worker B’s surviving spouse did exactly what the SSA blog suggests. She applied for survivor benefits when she turned 60, which is the earliest age of eligibility. As a result, she received a benefit of $1,859, which amounts to 71.5% of Worker B’s PIA, the minimum possible based on a PIA of $2,600.

Worker A’s surviving spouse ignored the SSA advice and waited until she reached Full Retirement Age to claim survivor benefits of $2,640, thus receiving 100% of the maximum possible, based on a PIA of $2,000. Read more…

How Many Thousands of Dollars of Social Security Benefits Will YOU Leave on the Table?

What if you discovered that what you don’t know about Social Security could result in your walking away from potentially thousands of dollars of additional income?  It happens to others, literally every day.

One recent study^[1] reports that anywhere from 46% to 59% of those who became eligible during the last two decades claimed Social Security retirement benefits as soon as they reached age 62.   But filing too early is not the only way you can leave money on the table.

Many people view the claiming decision as a simple one: should I take it now or should I wait?  If I delay claiming benefits, how long would I have to live before I would “break even” compared to claiming earlier?  Very often the decision only seems simple because an individual or couple is unaware of multiple options, many of which are not common knowledge, that may be available to them.

In fact, the Social Security retirement system is NOT simple.  Married couples can often employ a variety of claiming strategies to enhance their retirement income; special options may come into play if you were previously widowed or divorced.  However, if you don’t know about these options you cannot make informed decisions that could help you and your spouse avoid losing thousands of dollars of income to which you might otherwise be entitled.

Consider this situation:

When we first began talking about Social Security, Richard was a successful attorney, still active in private practice and earning a very good living.  He was 67, and had already made the decision to delay claiming his benefits until age 70.  His wife Jayne was approaching 62, wanting very much to retire and begin collecting her benefits as soon as possible.  One strategy I showed them, and which they implemented as soon as Jayne reached 62, allowed them to do exactly what they had wanted to do – and it provided them with more than $15,000 of additional income over the first 30 months.  They would have totally missed this opportunity but for a casual conversation that led them to seek my advice.

My work helps real people make informed decisions about their Social Security benefits: married people and divorced people; widows and widowers; spouses who are the same age and spouses who are years apart; people who “don’t need” Social Security and people who depend on it to make ends meet; people who are eligible for the maximum retirement benefits Social Security has to offer, as well as stay-at-home moms and “house spouses” who don’t have enough Social Security “credits” to qualify for benefits on their own work records.

My process is simple: I gather relevant information about you and your spouse, or former spouses; learn a little bit about your financial needs and goals in retirement; and put together a comprehensive analysis illustrating the most promising options available to you.  I then encourage you to share my work with your financial advisor so that your Social Security claiming decisions can be made in the larger context of your overall retirement income and survivorship planning.