Deferred retirement loans are especially important for married couples.
Want to increase your Social Security retirement income by 25% or more? You simply wait to apply for benefits and accumulate deferred retirement loans, resulting in a permanent increase in your benefits from five to eight percent annually.
Social security research shows that delaying the start of your benefits works well for both individuals and married couples, especially in low-interest rates.
If you are married, this steady increase becomes the survivors’ rights that are paid for as long as any of your lives. This can serve as a powerful form of securing the life of a long spouse who has earned less than you.
How do retirement loans work?
The amount of social security you receive is based on your full retirement age (FRA), which differs from the year you were born. If you claim before you reach the FRA, you get less.
However, once you reach the full retirement age, your benefits are not limited. In fact, for every year after the FRA that you delay taking benefits, you will constantly increase your benefits by 5-8% per year until your 70s. The amount of the increase depends on the year you were born.
You can find out exactly how many increases you would get with an online Social Security calculator, which shows you how the impact of early or delayed retirement will have on your benefits.
This strategy works especially well for couples who use it to maximize benefits. For a couple, when they both receive benefits, when the person passes away, the lower benefit is reduced and the higher amount of the benefit continues throughout the life of the surviving spouse.
When a senior infectious agent waits until age 70 to start using it, this ensures that the maximum survivor benefit will be paid.
Bonus Strategy Completed April 30, 2016For some couples, by April 30, 2016, one spouse was able to file and suspend at full retirement age, allowing the other spouse to file a limited application for full retirement marital discounts. This worked if the spouse who reported the restricted application had already reached the FRA and was born on or before January 1, 1954.
An engaged and suspended spouse would allow their benefit to accumulate deferred retirement loans and shift to this higher amount when they reach the age of 70 years. A spouse who files a limited application does the same, switching to his or her own benefit when he or she reaches 70.
Unfortunately, the new Social Security rules signed into law in November 2015 mean that the dossier and suspension strategy will only work for those who were able to suspend benefits on or before 4/30/16.
These new rules also mean that anyone born on or after January 2, 1954, cannot file a restricted application (unless they are widowed or widowed).
The new rules do not change the effect of deferred pensions.
It still makes sense to coordinate married couples to get the most out of survivors. Deferred retirement loans are what make this work. It still makes sense for individuals to look for ways to protect their income in their later years.
Postponing social security is one of the most effective ways to achieve this goal.