Bridgeriver Advisors - March 2020


MARCH 2020


3 Social Security Hacks You Need to Know

2. Consider a restricted application. When you file for Social Security, the Social Security Administration (SSA) is going to pay you the highest amount you’re eligible for, whether it’s 100% of your current benefits based on your earning record or 50% of your current or divorced spouse's (which applies only to certain circumstances). However, you can tell the SSA you don’t want your own benefits, even if they may be higher. Instead, even if you are the primary income earner, you can request the spousal benefit amount. This is a good route to take once you reach full retirement age (FRA) at age 66 — for those born between 1946 and 1954. When you hit FRA, you can file for a restricted application and take the spousal benefit while your own benefits continue to grow at a rate of 8% per year. Then, when you reach age 70, you can switch from spousal benefits to your own, and your Social Security benefits will be much higher. Just keep in mind that you can only do this if you were born before Jan. 2, 1954. Congress caught on to this great hack and began to phase it out in 2015. 3. Hold off on collecting Social Security. If you’re married, a good rule of thumb is to hold off on collecting the benefits of the highest wage earner. This is similar to the previous hack in that you’re letting your Social Security benefits increase in value. Every year past FRA, your benefits increase 8% if you defer collecting on them. Ideally, you want to wait as long as possible to collect. This ensures that what you do finally collect is as high as possible. This can benefit both spouses for many years, even after one spouse dies. When someone who was the higher wage earner dies, their spouse will see their benefits bumped up to the decedent’s deferred rate. They can continue

We know that navigating Social Security is difficult, but anything you can do to build your benefits as much as possible is a good thing. This is income that lasts the rest of your life, and it’s money you can count on. So, what can you do to get more out of your Social Security benefits? Here are three hacks you need to know. What’s nice about Social Security is that no matter what your overall income looks like, your Social Security will always be at least 15% tax free. But you can potentially change the rate so only 50% of your benefits are taxed. You can even get 100% of your benefits tax free. It just takes some strategizing and repositioning of assets. It all comes down to your provisional income. This is a completely different calculation than any other income you collect. If you know how your provisional income is calculated, then you can maneuver your assets so your Social Security benefits are tax-free or tax- reduced. Provisional income calculates together 50% of your Social Security benefits, along with generally everything earned from your nonretirement accounts, including dividends, interest, and capital gains. It also includes withdrawals from retirement accounts. If you’re still working or have rental homes, for example, the calculation becomes more complicated, but this gives you the basic idea. If you keep your provisional income under a certain amount, the way your Social Security benefits are taxed can change. It may shift from the standard 15% nontaxable to 50% nontaxable or potentially 100% nontaxable. 1. Know how your Social Security benefits are taxed.

to collect the higher amount for the rest of their life. This is why it’s so important to wait, if possible. It maximizes both your and your spouse’s income. If you are getting ready to collect Social Security benefits, then consider these strategies to get the most out of your return. And if you’ve been collecting Social Security for less than 12 months, there is still hope. If you need help getting started or have questions about Social Security benefits, we’re one phone call away. • Tuesday, March 24, and Thursday, March 26, from 6–8 p.m. at Loccino's in Troy, Michigan Visit our website for more information and to register at UPCOMING SEMINARS Join us for one of our upcoming seminars discussing the SECURE Act and how to maximize your life savings: • Tuesday, March 10, and Thursday, March 12, from 6–8 p.m. at Andiamo in Clarkston, Michigan • Wednesday, March 18, and Thursday, March 19, from 6–8 p.m. at Troy Community Center in Troy, Michigan

248.785.3734 1 -Dan Casey

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