Over and over we receive calls from folks that are over the age of 70 and have never claimed any Social Security benefits. In almost every case, this is a MAJOR mistake because Delayed Retirement Credits which are the increases that you receive as a result of waiting to claim your benefits stop accumulating at the age of 70.
So in other words, there is no additional advantage to waiting to collect your benefits once you have reached the age of 70.
Claim It or Lose It
If you don’t claim your Social Security by 70, for each month that passes you will begin to lose benefits and the loss of these benefits are PERMANENT with the exception of the short retroactive period I will mention in just a moment.
Remember, these are benefits that you or your spouse have worked hard for and earned and if they are not claimed, your benefits will be left in the system never to be received by you or your family.
Retroactive Benefits: Minimizing The Damage
If you’re over 70 and have not claimed your benefits yet, there is a 6-month retro-activity period that can be utilized to your advantage to at least help minimize the damage from lost benefits. You should always work with an advisor if you find yourself in this situation, because it is critical that your claim for retroactive benefits is filed correctly in order to ensure that you receive all the benefits that you’re entitled to.
As a quick example, if John is entitled to receive $3,000 per month at 70, but at 72 finally claims his benefits, he will be able to recoup $18,000 ($3,000 x 6 months of retroactive benefits), however, 18 months or $54,000 will be permanently lost because of the 6-month limit on retroactive benefits.
Types of Benefits
Keep in mind that there are various types of benefits that you may be eligible for and “the claim by 70 rule” applies to each of them. The most common types of benefits potentially available to you (depending on your circumstances) are as follows:
- Retirement Benefits: These are benefits received as a result of the work you did and the money you contributed to Social Security over your career.
- Spousal Benefits: In certain instances, you can receive spousal benefits based on your spouse’s Social Security record even if you have not worked or are only entitled to a small benefit on your own record.
- Ex-Spousal Benefits: These benefits are payable in a similar way to spousal benefits, however, you have to have been married for at least 10 years.
- Survivor Benefits: If your spouse or ex-spouse has passed away and their benefit was greater than your benefit, there is a good chance that you will be eligible for survivor benefits.
Don’t Need the Money? Donate It or Gift It
Some prospects we speak to say that they haven’t claimed because they don’t need the money. While this is certainly a good position to be in, claiming your benefits is still to your advantage even if it means that you will give the money to your favorite charity or gift it to your children or grandchildren. By claiming your benefits, you at least have a say in where the money goes and who will reap the rewards of your hard work.
The Bottom Line
If you find yourself in a position of being 70 or older and have not claimed your benefits, speak with an advisor who can guide you and assist you in making sure that you are using all the rules to your advantage in order to receive the retroactive benefits that you’re entitled to plus your benefits going forward. To schedule a Free initial consultation with an advisor click here.
Until next time,
Matthew Allen is the Co-Founder/CEO of Social Security Advisors and creator of the new course Maximizing Your Social Security produced in conjunction with Weiss Educational Services. Matthew has helped thousands of seniors maximize their Social Security benefits and avoid costly mistakes when filing. Matthew has been at the forefront of financial services for over a decade. In addition to co-founding Social Security Advisors, Matthew also founded The Universal Group of Companies, a private investment firm, in 2004. From 2000 to 2004, Matthew was a NYSE Market Maker with LaBranche & Co., a Fortune 500 New York Stock Exchange firm.