Happy Halloween – here’s how to increase lifetime payout with these not-so-scary benefits.
Who thought there would be a connection between Social Security and Halloween?
Andy Landis, a former Social Security Administration claims administrator an author of Social Security: The Inside Story, says there is, and he’s coined a term to describe it – “zombie” Social Security.
Fans of The Walking Dead may not be familiar with the term, but Landis says Americans have a chance to zombify their Social Security benefits.
What that means is their benefits are both dead and alive and that will increase their lifetime payout. Actually, Landis says, the term is officially called voluntary suspension of benefits.
What the impact of that is that makes people’s Social Security seem like it’s the walking dead, Landis says.
“When you suspend your benefits, they’re in suspended animation,” Landis says. “They’re dead in the sense that you get no payments. Because no payments are made, the payments are growing in the background, so they’ll be bigger when reanimated.”
While that’s happening, Landis says, your payments are still alive in that your spouse can draw monthly payments based on your work history. There’s no need for you to get payments to allow your spouse to have them. By suspending the payments instead of taking Social Security, that makes the spouse able to receive them.
Landis jokes that doesn’t mean people should ask the Social Security Administration to zombify your Social Security. They might give you weird looks and think someone ate your brain, Landis says. People should instead ask for a voluntary suspension of benefits.
Once you reach 70, payments restart automatically, Landis says. But because you’ve suspended them on your own, you can unsuspend them any time before you reach 70.
People still have the option of a lump sum payment of some or all of the suspended payments dated back to the date of the suspension, Landis says. That means any decision to zombify your Social Security is reversible until you’re 70.
Landis uses this as an example. If you’re full retirement age is 66 and you’re eligible for $2,000 in benefits a month, Landis says you can move to claim your benefits and request the suspension of your application and stop any payments.
At the same time, your spouse can claim a payment on your record, which would be 50 percent of $2,000 or $1,000 a month. When you turn 70, your Social Security would start but by delaying taking it, it has grown by 8 percent a year to 132 percent.
That means the payment will now be $2,640 a month instead of $2,000 in addition to the benefits your wife is getting. If you die, your spouse will get the $2,640 benefit, he says.
If you took Social Security at 62, your payment would be $1,500 a month, while your spouse would get $1,000 a month for a spousal benefit.
If five years later you got a job and no longer require Social Security benefits, you could then decide to suspend your payments, Landis says. That would not impact your spouse, he says.
Once you turn 70, your payments would restart and now that $1,500 a month payment would grow to $1,860, he says. Your spouse would get that if you die.
If after accepting the job, you stopped working at 69 and wanted to take your Social Security, Landis says your payments would be $1,740.
There are rules in that you have to reach the full retirement age, which is now 66, in order to suspend payments, Landis says. The law only requires you to suspend your payments and not your spouse.
No one can receive spousal benefits until they reach 62. The payments improve if the person waits until 66. Don’t file and suspend if you want spousal payments, he says.
“Zombie Social Security isn’t scary,” he says.