Social Security Inside Out

For many of us, Social Security will form the cornerstone of our income when we retire, yet most of us know nothing about the choices we face or even realize we will have choices.

Social Security is arguably the most complex and least understood program in the country, second only to the Federal Tax Code.

Fortunately, retired Social Security District Manager, Robert Bruce, offers an easy to understand Social Security Workbook on his web site at:

In 38 pages he takes the mystery out of the benefit choices we face and guides us through examples in order to make sound decisions.

Working couples in particular need to consider their social security benefit options before purchasing any type of retirement annuity.

For example, Mr. Bruce describes a hypothetical couple where each spouse is 66 years old and each eligible to receive “Full Retirement Benefits” of $1,200 per month based on their individual earnings record. Their combined benefit of $2,400 per month will drop to $1,200 per month when either spouse passes.

But they have another option. Spouse “A” can apply for the “Full Benefit” of $1,200 per month now while Spouse “B” defers their “Full Benefit” and applies for “Spousal” benefits of $600 per month now. Their combined benefit will be $1,800 per month for the next 4 years.

When Spouse “B” turns 70 he or she will then apply for his or her “Full Benefit” receiving a “Delayed Retirement Credit” boosting their benefit to $1,584 per month. The couples combined benefit now totals $2,784. If Spouse “B” passes first, Spouse “A”’s benefit will increase from $1,200 per month to $1,584 per month under the “Widow/Widower” benefit. The couple will be money ahead when they reach age 76.  In this scenario the spouse most likely to pass first should choose to take the spousal benefit now and defer their full benefit until age 70.

The age difference between each spouse as well as different earned benefit levels all play into the various options you may want to consider, but Mr. Bruce’s workbook covers all that and more.

For instance:

Did you know that your benefit is based on your average salary over the past 35 years?

Did you know that social security indexes each year’s earnings to today’s value before coming up with your average salary for benefit calculation? So, the $7,800 annual salary you earned in 1969 is considered to be $55,153 today.

Did you know there is a bonus for military service and work in foreign countries?

Did you know that Social Security has about 250 million W-2’s not credited to any taxpayer?  Mr. Bruce’s workbook will tell you how to make sure you get credit for all of your earnings.

I rarely endorse a product on this site but feel Mr. Bruce’s workbook is too important not too.

AARP has a social security calculator you may find useful as well.