Especially in a time when retirement investments may be under pressure, Social Security benefits can give retirees a secure source of additional income—one that doesn’t run out whether you live 10, 20, 30, or 40 years past retirement. Despite the proposed changes to Social Security, baby boomers are likely to receive full anticipated benefits, so it’s essential that you plan to get the most out of this available resource.

While Social Security probably won’t be enough to live on, it can nicely supplement other retirement savings. Social Security also pays benefits should you become disabled, pays spousal benefits if you’re married (or are divorced) and pays survivor benefits to a spouse if you die.

Benefit Amount
The amount of your Social Security benefit depends on several factors, including how much you’ve earned, how many years you’ve worked, when you retire and when you start to receive benefits. Full retirement age (FRA) is age 66 for people born between 1943 and 1954 and is phased up to age 67 for people born after 1954.

The retirement benefit t you’ll receive if you retire at your FRA is called your primary insurance amount (PIA). Early retirement benefits, survivor benefits and spousal benefit ts are all based on a percentage of that PIA. Your PIA benefits are calculated based on the 35 highest-earning years of your income history, with cost-of-living adjustments (COLA) to account for inflation, except for 2009 and 2010, when no COLA was awarded. Your PIA benefit is a percent of that COLA-adjusted average.

To calculate your estimated Social Security benefits refer to your annual Social Security statement or go
to www.socialsecurity.gov.

Spousal Benefits
If you’re married, you can claim the higher of either: 1) the Social Security benefit based on your own earnings record or 2) that based on your spouse’s. The spousal benefit pays you 50% of your spouse’s Social Security benefit. If one spouse earned significantly more than the other, this allows the lower-earning spouse to claim a higher benefit than
his or her own earnings provide.

Divorced spouses can receive the same spousal benefits if the marriage lasted 10 years or more and the person receiving the divorced spousal benefit is currently unmarried. More than one ex-spouse can receive benefits on the same worker’s record, and benefits paid to one ex-spouse do not affect those paid to the worker, the current spouse or other ex-spouses.

Survivor Benefits
When one spouse dies, the surviving spouse is eligible for survivor benefits and will receive the higher of the two people’s individual benefits. To claim survivor benefits, the couple must have been legally married at least nine months at the date of death.

When should I start taking benefits?
One of the most critical decisions for your Social Security planning is when to start taking benefits. If you apply for benefits before your FRA, your benefit amount will be reduced—and will not go up when you reach FRA. By delaying benefits you can increase your monthly benefit amount. For example if your FRA is 66 and you apply for benefits at age 62, you will receive 75% of your PIA. If, on the other hand, you delay and apply for benefits at age 70, you will receive 132% of your PIA.

If you’ve already started receiving benefits and wish you had waited, you have the option of paying back the benefits you received in order to restart payouts later—at an older age and a higher rate.

How can I maximize my benefits?
Consider these tips to make the most of your Social Security benefits:

• Review your annual Social Security statement for accuracy.
• Improve your earnings record and consider working longer if it will increase your benefit.
• Apply at the optimal time and delay receiving benefits if possible.
• Coordinate spousal benefits. Spousal benefits are available once the primary worker has filed. A lower-earning spouse can start receiving reduced benefits at age 62, while the higher-earning spouse delays benefits until FRA or later.
• Minimize taxation of your Social Security benefits by reducing other income with tax-advantaged investments.

What’s my best strategy?
Getting the greatest Social Security benefit requires that you plan ahead and coordinate Social Security with your overall retirement plan. Contact your financial advisor for a personalized plan that will help you maximize your income in retirement.