ALPENA - When it comes to Social Security benefits, there's good news and there's good news.
If you are 55 or older, you are likely to receive all of your Social Security benefits, said Tracy Greene, co-owner of Greene Financial with her husband, Jeff.
"It's insurance after all," Greene said.
News Photo by Betsy Lehndorff
Tracy Greene of Greene Financial looks over financial planning and Social?Secutiry information in her office in Alpena.
And if you are married or divorced, you or your spouse could collect benefits earlier, banking an additional $50,000 or more during your lifetimes, she said.
The key is to learn about the subtle layers of the law.
To do so, Greene and other financial specialists are getting training and are using new software programs that allow them to calculate the best time to file for retirement and collect benefits.
Other programs are available online, starting at $49.95, if you are willing to release information over the Internet.
Although Social Security does not offer complex calculations, you also should register for an online monitoring account at www.ssa.gov/myaccount/ and track your benefits, regional spokeswoman Carmen Moreno said. In January 2013 the administration launched the special log-in program and so far 10 million people have signed up.
That is where modern retirement planning now starts.
"We encourage people to do that," Moreno said. "The website gives people more ownership, where they can look at their SSI. It gives them more opportunities to do their retirement planning."
Do be careful. If you have fat fingers you can lock yourself out of the system, and will need to make a trip to your local Social Security Amdinistration office to get a temporary password.
Still, the site provides information about the law and offers simple calculators for determining your benefits and when to take them.
But little is said about collecting some of your spouse's benefits first and saving yours for later.
That's where Greene comes in.
One key is that a person needs to work at least 10 years to qualify for retirement benefits, Greene said. Then people need to find out what their minimum retirement age is, based on their birthday. They also need to find out their Primary Insurance Amount or PIA.
People who aren't computer savvy can go to their local Social Security office.
Once you have those PIA figures, Greene's calculator can tell you in a few days what the future holds.
While many factors are involved in determining when to retire, Greene generated several bare-bones scenarios, which reveal what Social Security has to offer couples.
Scenarios for Married Couples
Many people can file for early benefits at age 62. If they choose not to, their benefit will increase roughly 6.25 percent until their full retirement age, based on the year they were born, Greene said.
If they do start their benefit early, it is reduced 25 percent.
Example: Bill, who was born March 1, 1952, is the primary wage earner and is married to Katie, who also works. If Bill decided to retire early and collect his benefits, he would receive $1,350 a month for the rest of his life.
File and Suspend
You can file for benefits when you reach your full retirement age at 66, then hold off on collecting them until you are 70, Greene said.
Example: Bill would be eligible for retirement on his 66th birthday in 2018 and collect $1,800 a month for life. But he can file and suspend receipt of those benefits until he reaches age 70, and collect $2,376 a month.
This is where a person can collect a portion of his or her spouse's benefits for a while, without hurting either account, Greene said.
Example: Bill files a restricted claim at age 66, which allows him to collect some of his wife's benefits. If Katie's PIA is $1,800, Bill can receive $900 a month from her benefits, without interfering with them, Greene said. Meanwhile, his own benefits would continue to grow, providing him with $2,376 a month at 70. Checks though his wife's account would total $43,200 during the four years he waits.
"People think if they don't take any benefits until age 70, they will get full benefits," Greene said. "In fact there are options for couples to draw benefits on a spouse, while leaving their benefit to grow. At full retirement age, that's when the magic happens."
Scenario for a divorced couple
A divorced person can benefit from filing restricted, too, without harming an ex-spouse's retirement. But it could require some cooperation, because communication is needed.
Example: Bob and Carol were married for more than 10 years, have been divorced for at least two years, and neither party has remarried. Carol had higher earnings than Bob, so Bob can draw from Carol's benefits as early as age 62.
If Carol's birthday is March 1, 1952, at full retirement in 2018 she would collect $2,200 a month.
Bob, having earned less, has a monthly benefit of $900 month at his full retirement age of 66.
If Bob is 62 and wants to retire early, he could collect $675 of his own benefits, which is a 25 percent reduction. Or he could collect 50 percent of his ex-wife's reduced benefits. In this case it would be $825, instead of $675.
Calculations for widowed people are different, but those benefits can start at age 60, she said.
"People need to know this," Greene said. "People then can plan their retirement based on facts, not projections and guesses.
"Another piece with social security is there is a greater gain to be realized in learning these efficiencies rather than placing your money in high-risk investments seeking higher returns," she said.
Betsy Lehndorff can be reached via email at firstname.lastname@example.org or by phone at 358-5693. Follow Betsy on Twitter @bl_alpenanews.