LGBT Social Security Planning

Social Security financial planning is a key consideration for LGBT couples contemplating marriage.

Social Security Planning For LGBT Community Now that many states are allowing gay couples to get married, it is important to consider the financial advantages in retirement planning this status allows. In particular, there are Social Security planning strategies all LGBT married couples should be discussing.

When You Should Claim Benefits
While making the decision to claim Social Security is a highly personal one, the general maxim is -the longer you wait, the better! While one can start collecting at age 62, your Social Security benefit increases by 8% each year up to age 70. (After age 70, benefits do not increase at all). One should also remember that life expectancy has increased dramatically. Nearly one in three sixty five year olds today will live to age ninety, and one in seven will live to age ninety-five. Retiring at a later age will make it more likely one will not outlive their retirement savings. Finally, if one waits until age 70 to collect Social Security, they could allow their spouse to receive a greater survivor benefit when they pass away. So waiting to age 70 increases your own benefit, and your spouses benefits if you pass away first.

Spousal Benefits
An individual in a marriage can receive both their own individual benefits, as well as what are called spousal benefits. If you wait until full retirement age, you can receive a spousal benefit equal to half of what your spouse is entitled to at retirement age, in addition to your own individual benefit. In short, being married can be a huge advantage when considering retirement. This is one of the biggest financial planning reasons for LGBT couples to consider marriage! It often makes sense to apply for both individual and spousal benefits when you retire.

If One Person Has Higher Social Security Benefits: File and Suspend
A strategy commonly referred to as “file and suspend” works well if one partner earns a much a higher income and the lower earning spouse is ready to retire. In some cases, the spousal benefits can be even greater than the benefits based on your own earnings records. In this situation, the higher earning spouse can apply for Social Security, but then ask to suspend your benefits. In this way, the lower earning spouse can start collecting spousal benefits, while the higher earning partner can accrue the higher Social Security income by working to age seventy.

If Social Security Benefits Are Similar
There are other strategies that can be used for couples that have comparable incomes, if one spouse wants to continue working while the other decides to retire. In this situation, the spouse that retires would claim his/her Social Security benefit. Next, the working spouse would file what is called a “restricted application, asking only to collect their spousal benefit. In this situation, the working spouse could delay their retirement and receive the greater benefit at age 70, while also receiving their spousal benefits for a number of years.

Tags: LGBT Social Security Financial Planning, Gay Social Security Planning, LGBT Financial Planning