Get What's Yours: The Secrets to Maxing Out Your Social Security by Laurence J. Kotlikoff & Philip Moeller & Paul Solman

Author:Laurence J. Kotlikoff & Philip Moeller & Paul Solman [Kotlikoff, Laurence J.]
Language: eng
Format: epub
Publisher: Simon & Schuster
Published: 2015-02-16T23:00:00+00:00

SALLY SMARTY PANTS GETS DIVORCED

Sally Smarty Pants was very smart, except when it came to Social Security. She got divorced one day shy of 10 years after making a New Year’s resolution not to spend a whole decade married to John Know It All. Now she’s 63 and kicking herself not just for marrying that know-it-all, who turned out to know enough to make a lot of money. She also took her retirement benefits 366 days ago and wished she hadn’t. It’s now a day too late for her to repay every dollar she received and start up her benefit from scratch in the future at a much higher level.

What’s Sally to do? She was a modest earner, having worked all her life at the neighborhood bookstore (telling people what books to read—hence her nickname). But the store closed six years ago, costing her $40,000 per year in salary. Now Sally’s living off her $1,500 monthly retirement benefit check, whose lifetime value is $489,956. But Sally also has some retirement account assets thanks to her messy divorce. She’s got enough to forgo receiving Social Security till 70, but she’s given up that option by taking benefits early.

Not entirely! There is another strategy Sally can follow, namely to suspend her retirement benefit at Full Retirement Age (66 for her) and start it up again at 70. Her annual benefit will be $23,760, and her lifetime benefits, as of today, will be $542,608.4 That 11 percent increase in benefits is not going to pay for a life in the fast lane, but it’s extra money that Sally can definitely use and it’s hers for free, with no risk, just by becoming a Social Security smarty!

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