Personal Finance

Social Security May Be a ‘Treasure Trove' for You and Your Family. But First You Have to Navigate Some Complex Rules

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  • You may be overlooking the biggest potential source of funds in your retirement planning.
  • For many people, their lifetime Social Security benefits represent one of their biggest assets.
  • Knowing the ins and outs of the program's strategies is imperative for getting the most for you and your family.

When it comes to retirement, you probably have a lot of questions about whether or not you're making the right financial moves.

That may include uncertainty about investing and the best way to get the nest egg you think you'll need.

Chances are, you are overlooking potentially your biggest source of retirement funds — Social Security, writes Laurence Kotlikoff, an economics professor at Boston University, in his new book, "Money Magic: An Economist's Secrets to More Money, Less Risk and a Better Life."

Even for the wealthy, their lifetime Social Security benefits likely rank high among their largest assets. For people with average lifetime incomes, it is often the biggest.

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By using the right claiming strategies, you can maximize the total amount of money you and your family stand to receive from the program.

Kotlikoff has devoted much of his career to educating people about Social Security. He founded a company, Economic Security Planning, with the goal of helping people identify the best Social Security strategies to get them the most from their overall assets.

His new book outlines ways people can make sure they get the most out of Social Security.

Bottom line: "There are many ways to turn your lifetime Social Security benefits into a treasure trove," he writes.

What you don't know can hurt you

When you think Social Security, you probably think of retirement benefits.

You may not be aware that there are 13 kinds of different payments you may receive.

The list also includes disability benefits, spousal benefits, divorced spousal benefits, child-in-care spousal benefits, widow/widower benefits, child benefits, disabled child benefits, mother/father benefits, divorced widow/widower benefits, parent benefits, grandchild benefits and death benefits.

That helps explain how 64 million Americans are collecting money from the program.

But each kind of benefit comes with its own set of requirements. The problem is that it's a use-it-or-lose-it system.

"If you don't formally request a benefit for which you are eligible, you won't get it," Kotlikoff writes.

It's often best to wait to claim

While it makes sense to wait until 70 to get the biggest potential benefit available to you, you're just leaving money on the table if you delay past that age. And Social Security may only make up for six months of that lost time.

Eligibility for Social Security retirement benefits starts at age 62. For every year you collect benefits before your full retirement age — generally 66 or 67, depending on the year in which you were born — you take a cut of about 7%.

If you collect at your full retirement age, you get 100% of the benefit you earned. For every year you wait past full retirement age up to age 70, your benefits increase by about 8%.

If you wait from 62 to age 70, your retirement benefits will be about 76% higher.

To be sure, waiting until age 70 won't make sense for everyone, particularly if you have a health condition that could potentially shorten your life or if you simply can't afford to do so.

Your decision affects your whole family

Sometimes maximizing your family's benefits is a bigger priority than getting the most you can on your own.  

For example, if you are married with a disabled child, claiming benefits will also trigger what's known as a child-in-care spousal benefit and a disabled child benefit.

In this case, waiting to let your monthly checks grow could ultimately reduce the total lifetime benefits your family receives.

While it would still make sense to wait to claim past age 62 in that situation, it wouldn't make sense to wait all the way to age 70, according to Kotlikoff.

However, there are situations when waiting until age 70 will result in a higher benefit for your family.

That will increase the amount your spouse may be able to collect on your record if you die.

Those payments, known as survivor benefits, enable a widow or widower to receive the full amount of their spouse's monthly benefit — which may be their own retirement benefits plus excess survivor benefits if they have their own earnings toward Social Security.

Ex-spouses may also be eligible for survivor benefits, provided they were married for at least 10 years and waited to age 60 if they got remarried.

Notably, the survivor benefit available to young children or disabled children of any age, provided they were disabled before age 22, does not change based on when you claim.

Because there are thousands of Social Security claiming strategies, it helps to use independent software that can calculate the best strategy for you.

"The big problem with Social Security's software is that it doesn't deal with the family as a unit," Kotlikoff said.

"And what the husband can do will impact what the wife can do," he said.

Other tips to remember

By identifying all the benefits for which you are eligible and when, you can make sure money doesn't fall through the cracks.

You also need to be your own advocate. Different Social Security employees may give you different answers, according to Kotlikoff. By doing your research, you can advocate for the money for which you are eligible.

It's also important to apply for those benefits on time so you don't miss out on any money due to you, he said.

Have you experienced delays when contacting the Social Security Administration about your retirement benefits? If you would be willing to share your experience for a future article, email

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