It occurred to me as I wrote the last blog that I maybe was putting the cart before the horse. File-and-Suspend strategy is pretty complex and most people don’t understand even the basics of Social Security. So, here are a few concepts that will help you speak that beautiful language that I call Social Securitese.
Qualifying for Social Security benefits – You must have put into the system for 40 quarters (10 years) in order to get any retirement or survivor’s benefits later.
PIA (Primary Insurance Amount) – The benefit a person receives if he/she takes Social Security at normal retirement age (about 66 or 67 years old for most current non-retirees). This amount is determined by a formula using your Average Indexed Monthly Earnings for 35 years (not the 10 years used to qualify for payouts!).
AIME (Average Indexed Monthly Earnings) – A calculation used to determine your PIA. The calculation adjusts your earliest earnings for inflation so you won’t lose the value of your past earnings when money was worth more.
Early Retirement – You may start receiving benefits as early as age 62. If you choose to do this, your benefits will be permanently reduced (there are some cumbersome exceptions to this) due to the longer payout period. Try to wait as long as you can to take Social Security!
Spousal Benefit – Your spouse does NOT have to be dead for you to get this! You can file for ½ of your spouse’s benefit or your own work benefit, whichever will be higher. Your spouse has to have filed for Social Security and you must be old enough to receive the benefit (at least 62 for a reduced benefit).
Speaking of spouses, or Ex-Spouses – If you were married for 10 years or longer, have been divorced for at least 2 years, and remain unmarried, you may choose to use your ex-spouse’s spousal benefit if it is better than your own. If you were married multiple times for over 10 years, you can choose the benefit of the best earning spouse.
Your eyes are probably glazing over now so I’ll stop here. For more help in how to best take Social Security, contact me for a one-hour consultation or comprehensive retirement income plan.
If these topics sound like they would be of interest to your employees, sales conference, or professional organization, contact me at 303-324-0014 or kristi@