If You’re Disabled
If you’re receiving Social Security Disability Insurance (SSDI), there’s no need to worry about maximizing your monthly payments. SSDI benefits are calculated assuming an employee worked till full retirement age, so your SSDI benefits are as high as possible. There is no benefit of trying to switch your SSDI benefits to early retirement, as you’ll have similar working restrictions and early retirement payments would be lower than SSDI. Your SSDI benefits will “convert” to retirement benefits once you hit your full retirement age.
If You’re Between the Ages of 62-65
It’s possible to receive Social Security benefits early at age 62, but you’ll receive a reduced payment. On the other hand, if you delay retirement till age 70 you’ll receive 130% of your monthly entitlement. So should you take early benefits, wait till your full retirement age, or delay till age 70? It honestly depends on your health.
If someone takes Social Security at age 62 as opposed to full retirement age at 66, the claimant will not hit the “break even” point until age 78. The break-even point is the year at which waiting till full retirement benefits will have been more profitable. This is because while a claimant would earn 25% more money at age 66, the early retiree will have received a full four years of retirement benefits. Waiting till age 70 to receive benefits will push a break-even point back even further, well into your 80s.
So if you’re in great health you can always take your Social Security benefits late, but if you need the money now or have health concerns, opt for early retirement. If your health issues are severe enough you should apply for Social Security disability benefits first, as these payments will be much higher than early retirement.
If Your Spouse Receives Social Security
You may be eligible for more than one Social Security payment at any given point. Spouses age 62 and older can receive benefits on behalf of a retired or a disabled partner.
One of the best ways to maximize your retirement benefits is to receive benefits on behalf of a spouse and delay your own retirement benefits. Until 2015 the most common way of capitalizing on this method was called “file and suspend.” Someone would file for Social Security but immediately suspend payments, telling the SSA to not send any payments. At that point a spouse would file for spousal benefits of 50% of the suspended payments. This would mean both spouses would max out their Social Security benefits at age 70.
While you cannot file and suspend anymore, you can still receive 50% of a spouses’ current Social Security retirement benefits until age 70. This allows one spouse to max out his or her retirement while still receiving Social Security in the meanwhile.
As a Survivor
If your spouse passed away, you are entitled to survivors’ benefits. These payments will be 75-100% of what your spouse’s monthly Social Security payment entitlement. Another common way to max out benefits is to receive survivors’ benefits on behalf of a deceased spouse until you reach age 70.
If an ex-spouse passed away, you still may be able to receive survivors’ benefits under his or her account. So long as you were married for at least 10 years and you did not remarry after your divorce, you should be eligible for survivors’ benefits.