The

Franklin Prosperity Report

‘a penny saved is a penny earned’ Special Edition

Strategies to Maximizing
Your Social Security
Most Americans haven’t heard of Ida May Fuller, the first person to receive
a monthly Social Security check. Her schoolmate Calvin Coolidge, the 30th
president of the United States, is certainly better known. But as retire-
ment role models go, most of us would surely aim to repeat Fuller’s example
if we could.

After paying just $24.75 in Social Security taxes during the first three
years of the program, Fuller retired at 65, proceeded to live to 100, and
received a total of $22,888.92 in benefits during her lifetime. You could
definitely say that Fuller maximized her Social Security benefits.

Of course, the program is quite different today. Most noticeably, we have

more options for when to file for Social Security than Fuller did. Near-
retirees can choose to take benefits at age 62, 66, 70 or any age in
between. Choosing when and how to claim these benefits can be one of the
biggest financial decisions you’ll ever undertake.

In this special report, we will help you decipher the best strategy to
claim your hard-earned benefits and share all the essential considerations,
including:

• The importance of full retirement age

• What your benefits are, and how they are figured

• What you can do to raise or lower your monthly check

• Factors to keep in mind when deciding when to claim

• The top planning mistakes most Americans make

• Specific strategies for maximizing your benefits, whether you are

married, divorced, or single

After involuntarily contributing thousands of dollars to Social Security

over your working life, it’s time for you to have full understanding of
when to withdraw from it. Let’s get started.

Continued on page 2

www.franklinprosperityreport.com
 Continued from page 1
The Critical Decision: When to Take Your Benefits
Social Security should be so simple. After all, most of us have only one
decision to make: when to start taking benefits. But that decision comes
with so many variables and unknowns that it can feel like aiming with a
blindfold on.

The primary obstacle is that, of course, none of us knows how long we are
going to live. While Social Security payments continue for life, the monthly
amount can be considerably higher the longer one waits to start taking it.

So what is the “best” time to claim Social Security?

If your first thought is, “As soon as I possibly can!” we urge you to
discover all the options out there. Taking benefits right away may very
well make sense for you, or it might not. You owe it to yourself to find
out.

Full Retirement Age: A Magic Number

What is “full” retirement age, and why does it matter? It’s different for
everyone, depending on the year you were born. If your birth year is 1943
through 1954, it’s 66. For every year thereafter, the full retirement age
goes up by two months, leveling out at 67 for
those born in 1960 or later.
Did You Know?
Knowing your full retirement age (also some- Benefits are not
times called normal retirement age) is critical,
because nearly everything about Social Security gender-specific; they
hinges on it. It’s the baseline, and if you start are solely based on
benefits right then, you will receive 100 percent
of your primary insurance amount (PIA). Your PIA the worker’s earnings
is the amount you’ll receive every month from record. A man or
Social Security if you file for benefits at full
woman can claim
retirement age.
spousal benefits or
You may be wondering, “Why would I ever not get survivor benefits.
100 percent of my promised amount?”

It’s because the Social Security Administration has an incentive for you to
wait longer to start receiving payments, through the mechanism of delayed
retirement credits that you collect until age 70. As Gary Marriage, Jr.,
CEO of Nature Coast Financial Advisors, explains, “Social Security benefits
grow 8 percent every year you delay them.” An 8 percent increase per year
means that the monthly benefit you would receive at a full retirement age
of 66 would be 32 percent higher four years later at age 70. In dollars,
a PIA of $2,000 would become a more sizable $2,640, which you’ll receive
every month for the rest of your life.

There is also an opportunity to take benefits before full retirement age,

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 but there are penalties for doing so. The charts are complex and vary by
birth year, but your benefits would be cut between 5 and 7 percent every
year earlier than full retirement age that you file. So if you claim at
the earliest opportunity, age 62, your monthly amount would be 25 percent
less than if you file at age 66 (and 57 percent less than waiting until age
70). To continue the example above, a $2,000 PIA would be slashed to just
$1,500 if claimed early.

Beefed-up monthly payments aren’t all you forfeit when claiming benefits
ahead of full retirement age. You also lose the ability to perform some
filing options that can be very advantageous,
and you are penalized for any income over a
certain threshold (more on both of these points Social Security Quirk
later). If you were born on
For these reasons, Matthew Allen, co-founder Jan. 1 of any year, you
and CEO of Social Security Advisors, a firm that should reference to the
provides personalized Social Security claiming
recommendations, says that taking benefits at previous year in Social
age 62 is generally the wrong approach for most Security tables.
people.

“The main issue is that you preclude yourself from making better deci-
sions,” he says, noting that those who file early aren’t able to take
advantage of some of the most effective maximization strategies. “You’re
locked in at that claiming date.”

When Should I Start Thinking About

Maximizing My Benefits?
Social Security education is an issue for your 50s and early 60s, accord-
ing to Tom Margenau, retired deputy press officer for the Social Security
Administration who now advises the public on benefits-related issues in a
syndicated column.

“Once you’re on Social Security benefits, I don’t have too much to tell
you,” he says. “Whereas if you’re in your 50s or very early 60s, I’ve got a
ton of information for you about how your benefits are figured and poten-
tial maximization strategies.” He adds that starting in your 50s allows you
the freedom to really think through the options.

Financial adviser Marriage typically starts discussing the issue with his
clients around age 59½. “At that time they can start taking from retirement
accounts without a 10 percent penalty,” he says. “We pull up their state-
ments, and we figure out what their benefits are going to be.”

As far as the actual process of signing up for Social Security, Margenau

says that in almost all cases, it’s immensely simple. “It might take a
week or two to process a claim. You could potentially walk into a Social
Security office a week before you want your benefits to start and it would
be no problem,” he says. “Social Security advises people to start the ball

Special Report Moneynews.com 3

 rolling two to three months ahead of time just to be safe.”

What Benefits Am I Entitled To?

When you retire, the Social Security Administration can pay benefits to
these individuals on your earnings record:

• You. If you have worked roughly 10 years, you are eligible to receive
benefits. (Technically, you need 40 credits total to qualify. You can
accumulate a maximum of four credits per year. This year, every $1,160
of earnings yields one credit.) You can easily access your earnings
record online at ssa.gov/myaccount to see where you stand.

• Your Spouse. Spouses can claim a benefit worth as much as half of what
Social Security pays you, even if they have enough credits to qualify for
their own benefit. No, Social Security
doesn’t add them together (darn!) but
it does pay the higher of the two. Social Security Myth:
“I have to be married to
• Your Ex-Spouse. Did you know that? Many
people don’t. But not to worry — any someone for 10 years to get
benefits paid to a past spouse have no benefits on their record.”
effect whatsoever on your benefits. To
claim, your ex must be over age 62 and
The 10-year rule is for
unmarried, and your marriage had to have divorced spouse benefits
lasted at least 10 years.
only. For regular spousal
• Your Kids. Minor children of retir- benefits, you only need
ees can receive benefits, as can some
disabled children of any age.
to be married a year. For
survivor benefits, it’s even
When you pass away, the above individu-
als (as well as any dependent parents) less: just nine months.
can receive a survivor benefit, which can
vary based on their age and the amount you were receiving at the time or
were scheduled to receive at full retirement age. Again, if your spouse or
ex-spouse is eligible on his or her own record, Social Security will pay
the higher of the two.

Factors to Consider When Choosing Timing

We’ve covered how your benefit amount changes depending on when you file.
Here are some other factors that might affect your decision:

Marital status. “If you’re married, joint planning is extremely important,”

says Angela Deppe, CPA, founder of Social Security Central and co-author
of It’s Your Money! Start by determining which of you will have the higher
benefit amount and by how much. It’s also crucial to find out what full
retirement age is for both of you. These two factors, in addition to the
age difference between you, can greatly affect what strategies are avail-
able at different points in time.

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 Life expectancy. It’s the central
question of all this, but life expec-
tancy can be the hardest to quan-
tify. Allen says that for most
people, “there tends to be a bias
toward thinking they’re not going to
be around for very long.”
That’s why it helps for planning
purposes to have an estimated life
expectancy. Not sure how to esti-
mate such a thing? A good place to
start is with the Social Security
life expectancy calculator, which
you can find at ssa.gov. (Enter “life
expectancy calculator” in the search
box and select the first result.) It
a simple calculator that uses just
your gender and birth date. For a
more detailed version that consid-
ers health status and other factors,
visit livingto100.com.
Overall financial circumstances. Some
folks’ current cash needs dictate
that they take Social Security bene-
fits early. But if you can draw funds
from personal savings, pensions, or
retirement plans first, waiting to
claim later could be a smart move.
Allen says he also looks at what the
balance is in a client’s overall
portfolio, and specifically how well
it is hedged for inflation risk.
Family longevity. Do long lifespans
tend to run in your family? If so,
you might plan for having a long life
yourself. Even if your relatives
aren’t particularly long-lived,
medical advances and our knowledge of
lifestyle factors are helping people
add more years to their lives. “Most
people expect to live longer than
their parents before,” Deppe says.
Health status. Some people may weigh
their health status more heavily in
the calculations if they have a condi-
tion that will likely limit their
life. “If you’re not going to live
Special Report Moneynews.com 5
Taxes and Social Security
Fortunately, the tax considerations
for Social Security benefits are fairly
straightforward. Here are answers to
common questions.
Are Social Security benefits taxed by the
federal government?
Yes, but not 100 percent. The maximum
amount of your benefits that can be taxed
is 85 percent, and that’s only if you have
other substantial taxable income sources.
Are Social Security benefits taxed at the
state level?
It varies by state. There are currently 14
states that tax Social Security benefits:
Montana, North Dakota, Minnesota,
Utah, Colorado, New Mexico, Nebraska,
Kansas, Iowa, Missouri, West Virginia,
Vermont, Connecticut, and Rhode Island.
How do I pay taxes on Social Security
benefits?
You can have taxes withheld from
your benefits or you can pay quarterly
estimated tax payments.
How can I reduce my taxes?
Consider drawing down any IRA money
before taking Social Security. Another
option is to convert traditional IRAs to
Roth IRAs. Income from a Roth IRA is not
part of the income formula used for Social
Security tax purposes. Also, delaying
Social Security benefits in general can
reduce the number of years subject to
taxation.
I’m receiving Social Security benefits and
working part time. Social Security taxes
are being deducted from my paycheck. Is
that allowed?
Yes. You must always pay payroll taxes
on any wages you earn below $113,700,
even if you are currently claiming benefits.
Self-employed individuals must pay these
taxes as well.
 past 75, collecting benefits early makes sense,” according to Marc Kiner,
CPA, a certified national Social Security adviser and co-founder of Premier
Social Security Consulting, a firm that provides individual consultation
for retirees and trains advisers nationwide.

If you consider yourself very healthy, you might want to plan for a longer
lifespan by delaying benefits as long as possible. Or, on the flip side,
you might want to start claiming benefits earlier while you are still
healthy enough to enjoy them.

Work status. If you desire to keep working (whether out of pleasure or

necessity), you can do so and take Social Security retirement benefits at
the same time. The good news is that after you reach your full retirement
age, there is no penalty for working and receiving benefits, too. However,
if you claim early, there is a limit to how much you can earn before some
benefits are taken away.

Lifestyle objectives. There are also quality of life issues to consider.

Would you rather have the money sooner to enjoy as you please? Margenau
offers a view that’s contrary to most of the financial advisers: “It’s
my personal opinion that people are trying too hard to gamble with their
Social Security benefits. People who put off taking benefits to age 70 have
to live into their mid-80s to come out ahead of the game. Think it through
and decide if it’s really worth it.”

What Affects My Monthly Check?

Choices you make can adjust your monthly payout both upward and downward.

You can increase your monthly check by . . .

Waiting to file for benefits. Remember, you can start receiving a monthly
check when you turn 62, but you can also delay taking it as late as age 70
to get a much larger amount
(8 percent more each year)
for the rest of your life. If Age Milestones to Know
you are relatively healthy
and can take the income from 50: When disabled survivors can start receiving
other sources that give less benefits
than an 8 percent return, many 60: When non-disabled survivors can start receiving
advisers recommend waiting benefits
as long as you can to file. 62: Earliest you can start receiving retirement
benefits at a reduced rate
This holds true for spousal 65–67: Full retirement age, depending on your birth
benefits as well. “You get year; you receive 100 percent of your benefits if you
half if you wait until 66, file here
a third if you take at 62,”
Margenau says. Plus, wait- 70: Delayed retirement age; you receive increased
ing at least until your full benefits for waiting until this time to file
retirement age — to take

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 spousal benefits or your own — provides you with additional filing options
that may help increase your family’s payout even more.

Earning more income throughout your lifetime. Social Security benefits

are based on a formula that includes your highest 35 years of earnings,
indexed for inflation through
age 59. “People think it’s the
last few years or the highest-
If You’re a Few Credits Shy of
earning five,” Margenau says. Qualifying for Social Security …
“The first way you maximize
your benefits is by making more
Taking a part-time job to put you over
money. People should be think- the top may be the best decision you
ing about it from day one.” ever make. You can earn four credits a
Filling in the “zeros” or low- year by making just $4,640. As soon as
income years in your earnings you have 40, you can qualify for lifetime
record. Because of the benefit
formula noted above, if some- benefits when you retire.
one has fewer than 35 years of
earnings, some years will be counted as zeros, bringing the monthly payment
down significantly. “Having zeros is very common among women, who may take
time out to care for children,” Allen says. If you have zeros on your
record, you will always come out ahead by working more. Replacing any zero
with earnings, even minimal ones, will only increase your Social Security
check.

Doing nothing. Social Security benefits are protected from inflation by a

yearly cost-of-living adjustment, referred to as COLA. If there is a year-
over-year increase in the consumer price index, your benefit amount will
automatically be adjusted by the appropriate percentage. Note that COLAs
are only applied upward, never downward, even in an economic downturn. The
COLA highlights another advantage to claiming benefits later for a higher
payout: The same percentage increase is applied to all benefits, but higher
amounts will get a bigger increase in dollars.

You decrease your monthly check by . . .

Filing for benefits ahead of full retirement age. Taking benefits early
will make your monthly payments as much as 30 percent lower. “Any time you
collect a Social Security check under full retirement age, there’s a limit
to benefits,” Kiner says.

Taking benefits early, plus continuing to work. For those receiving bene-
fits between age 62 and their full retirement age, Social Security uses
an “earnings test” to determine how much of those benefits to withhold, if
any. Every year, there is a certain amount (for 2013, it’s $15,120) that
is not subject to the earnings penalty. You can earn that amount with no
effect on your monthly check.

“Over that, you give up one for every two dollars in excess income,” Kiner
says. So, if you make $25,120 in one year ($10,000 over the limit), Social

Special Report Moneynews.com 7

 Security will take back $5,000 of your benefits for that year. “But they will
make it up to you at a later point,” Kiner adds, by performing an “adjust-
ment of reduction factor” when you reach retirement age. Essentially, you
will be given credits for the number of months that payments were withheld,
so the penalty is somewhat temporary.

On the bright side, working at any point in retirement can also have the
ultimate effect of increasing future benefits, as Social Security automati-
cally recomputes your PIA each year that you have any earnings. Margenau
explains: “So if the money you’re making now can replace the lowest of
those 35 years used in the original computation, it can bump up your Social
Security check a little bit.”

Avoid the Most Common Mistakes

Kiner says that easily 90 percent of the clients he sees aren’t getting the
full benefits to which they’re entitled. “They don’t know any better,” he
says. “They have no clue as to what
their options are or how to maximize
their benefits.”
Term to Know: Breakeven Age
The age at which your total
Hence a field of specialty finan- Social Security income from two
cial advisers has sprung up counsel-
ing near-retirees about their options claiming options is the same.
and revealing hidden opportunities To live past the breakeven age
to squeeze the most funds from the
system. Fees for the service range means you came out ahead by
from $25 to $350 depending on how much waiting to claim at the later date.
detail and ongoing support you want.
For that investment, to use figures
This usually falls around age 80
from Allen’s firm Social Security for most.
Advisors as an example, an average
married couple could net something like $120,000 in additional benefits.
(For DIYers, software available online can help you identify similar
options.)

But why do we need all this help in the first place? What are most ordinary
Americans doing so wrong when it comes to Social Security planning? What
key concepts do we miss that these professionals don’t?

We asked our experts to identify the top mistakes they see that cost fami-
lies thousands. As you start planning for Social Security, be sure you’re
not making one of these critical missteps:

1. Thinking the Social Security office will advise you. With 10,000 people
reaching age 65 every day, the Social Security folks simply don’t have
the resources to provide in-depth counseling to everyone. “There’s only
so much they can do,” Deppe says. “When you provide any type of financial
advice, there’s liability with that. They know the rules like the back
of their hand, but they don’t know everyone’s situation.”

8 FranklinProsperityReport.com Special Report

 As a former Social Security Administration employee, Margenau offers an
insider’s perspective. He says the notion that a representative should
be able to advise you is both true and untrue. “They are not financial
advisers. Their job is to take your claim and file the kind of claim you
want to file.”

He adds that Social Security employees will not tell you to take one
option over another, but they should be able to explain the basic options
you have. But if you find yourself starting your research the day you go
in to file for benefits, know that it may be too late to take advantage
of certain strategies. “It’s so important to seek some advice before you
head to the Social Security office,” Margenau says.

2. Trusting your financial adviser to plan for Social Security. So if the

Social Security office can’t provide individualized advice, certainly
you can turn to your trusted financial plan-
ner, right? Perhaps not.
Did You Know?
“Social Security is complicated, and folks Social Security is
don’t understand what their options are, and
neither do their professional advisers,” Kiner
starting the process
says. When asked by their clients for Social of paying claims to
Security advice, “many times, these advisers same-sex spouses.
will hide under their desk,” he quips.
Visit ssa.gov/doma for
Fortunately, the tide is turning on this ongoing updates.
aspect, with several of our experts saying
they’ve participated in workshops to train
financial planners specifically about Social Security strategies. “A
lot of financial advisers are getting smart about it because it’s a good
way to bring clients in the door,” Deppe says.

3. Not reviewing one’s earnings history. “Folks should always be check-

ing and making sure it’s accurate,” Allen says. “There can be
discrepancies, especially for the self-employed.” In a dated but
still relevant 1989 report, the Social Security Administration
found that 6.5 percent of earnings records had inaccuracies
(4.6 percent had errors affecting the retiree’s benefit amount).

Even errors with a small impact on your monthly benefit — say $5 or so

— can add up and compound over time, shorting you hundreds of dollars.
That’s why you should check your statement at least annually at ssa.gov/
myaccount. Note that there is a time limit for correcting any issues you
might find: three years, three months, and 15 days after the close of
the tax year of the earnings in question.

However, if you do discover something off and it’s outside this time frame,
you should still contact the agency and let them know. Representatives
have some leeway to correct errors even when this window has closed.
Bring as much of your own documentation of your earnings as you can.

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 4. Applying for benefits just because you’re Social Security Quirk
eligible. Taking Social Security as soon as
you can, perhaps because you think there might Your first benefit check
be changes to the program, is not a recom- might come long
mended strategy, according to our experts.
after your birthday. At
“A lot of people take it early because they’re
whatever age you claim,
afraid it’s going broke,” says Deppe. “What
people don’t realize is that we’ve always had you have to have been
this issue, and it’s been tweaked over the that age for one whole
years. It was tweaked in the ’80s to raise
the full retirement age.” month before you are
entitled to benefits.
Even without a resolution to the long-term
funding issue before 2033 — when the trust (Being born on the 1st
fund surplus is projected to be exhausted — or 2nd counts for the
the fund would still pay out 75 percent of
benefits. “Everybody’s different; not every- whole month.) Plus,
body should wait,” Deppe adds. But if you Social Security pays
decide to claim early, make sure it’s first
and foremost the right decision for your benefits the month
individual finances, and nothing else. after they are due. So
Another reason filing for Social Security if your birthday is July
early can be a mistake is that some key 15, you are first entitled
filing strategies to maximize your bene-
fits are off-limits. If your intention is to a benefit in August,
to sign up for your spouse’s benefit at and you would receive
62 and switch to your own at full retire-
ment age, you need to know that won’t fly.
a check in September.

“What Social Security has always said is that an application for one
Social Security benefit is an application for every Social Security
benefit,” Margenau says.

The term for this is a deemed filing; when you register at 62, you’re
deemed to be filing for every benefit you’re potentially eligible for.
At full retirement age, however, this limitation is lifted; you could
try the same strategy and it works perfectly this time. (In fact, it’s
one of the maximization options we share below as “claim now, claim more
later.”) “It’s only if you wait until age 66 [or your full retirement
age] that you start to get into these potential maximizing strategies,”
Margenau says.

5. Forgetting to take two lifetimes into account. Guessing at your own date
with the Grim Reaper is certainly hard enough. But because of Social
Security’s valuable survivor benefit, you should also consider how many
years your spouse might remain alive should you pass away first. (In
general, your full monthly benefit amount passes on to your spouse.) “In
many cases, the spouse lives 20 to 30 years more,” Deppe says.

So how can you estimate what your joint life expectancy might be? Social

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 Security provides some guidance in this, with its data showing that for
a current 65-year-old couple, the chance that at least one will live to
age 90 is a surprisingly high 45 percent. To maximize benefits for the
longer-lived spouse, an optimal strategy involves allowing the higher
earner’s own benefit to grow to its maximum level, while the couple
files for other types of benefits in the meantime. In the next section,
we’ll show you several options for doing this.

The Maximizing Strategies

In addition to the basic ways you can affect your monthly check as described
previously, there are strategies to amp up your benefits even more. While
they may take some effort to coordinate, these sophisticated tactics can
increase your payout by thousands over your lifetime, the experts say.
“People have rightly paid into it, so they’re entitled to get as much out
of it as they can,” says Allen.

Let’s start with married couples, who have the greatest opportunities
to coordinate their benefits but also the largest number of permutations
to navigate. “Married couples can have 10 to 15 options,” Kiner says. If
you’re hitched, here are a
few strategies that might
benefit you: Social Security Myth:
“When Social Security started, average life
“File and suspend” to
enable spousal benefits. expectancy was only in the 60s. Therefore,
Also known as “claim and the original intent of the program was for
suspend,” it’s the most
common strategy by far,
most people never to claim their benefits.”
Deppe says. And it works The high infant mortality rate in the 1930s
like this: You file for skews the life expectancy data for the
benefits and immediately
request a suspension of period. A better measure to follow, says
those benefits before any the Social Security Administration, is the
payments are made.
life expectancy after someone attained
What’s the point? To trig- adulthood, which was much higher.
ger your spouse’s ability
to apply for spousal bene-
fits on your record, which the Social Security Administration won’t pay
out unless you’ve already filed. It’s commonly executed so one spouse
can receive some benefits while the other accumulates delayed retirement
credits.

In other words, “If the guy waits until 70 to get benefits, his wife won’t
get a nickel until he turns 70,” Margenau says. “If he files [and suspends]
at 66, his wife can get a dependent wife benefit. Then at 70, he unsuspends
his claim,” at which point he will collect his maximized monthly amount.
Note that you have to be at least full retirement age, and only one member
of a married couple can file and suspend benefits at once.

Special Report Moneynews.com 11

 “Claim now, claim more later” by using a restricted application. As times
change, more and more Americans qualify for benefits both as a spouse and
under their own earnings history. Yet Social Security pays only the higher
of the two and always considers a person’s own record first, which usually
cancels out the spousal benefit.

That is, unless you use the restricted application strategy. It’s a way
to have your cake and eat it too — claiming spousal benefits while you
wait for your own benefit to mature to age 70. As Margenau explains, “With
restricted application, you can forgo taking your own benefits and take
your spouse’s benefits instead.” Again, only an option if you have reached
full retirement age.

You may want to take advantage of this strategy if you can, as Margenau
doesn’t think it will be around forever: “Spousal benefits were always
only paid to those who were financially dependent on the spouse,” he says.
“Restricted application has thrown all that out the window. That’s a loop-
hole that I’m sure Congress is going to change somewhere down the road.”

A similar strategy can also work with survivor benefits, which can be
collected as early as age 60 (50 if you are disabled). “Claiming early as a
survivor and on one’s own record later
works best for higher earners,” Allen
says. “Claiming one’s own benefit Social Security Myth:
early and claiming as a survivor later
works better for lower earners.”
“If I am remarried, I can’t get any
benefits off a previous husband.”
Divorced individuals have opportuni-
ties to maximize benefits, too. They
This is true for divorced spousal
can claim benefits on a former spouse, benefits, but not true for survivor
provided the marriage lasted 10 years,
they have been divorced at least two
benefits. A surviving spouse
years, and the one claiming divorced (divorced or regular) can remarry
spousal benefits has not remarried. as long as it’s after age 60 and still
If this is your situation, your strat- claim benefits.
egy will primarily involve comparing
your benefits with your ex-spouse’s. (You can find out your potential
divorced spouse benefit amount from a Social Security office. You don’t
need to contact your former spouse, and he or she will not be notified that
you applied.) Here are some ways to use it to your financial advantage:

“Claim now, claim more later” using an ex-spouse’s record. It works just
the same as for a married individual. If you’re eligible under your own
earnings record as well as a former spouse’s, when you reach full retire-
ment age, you can file a restricted application for divorced spousal bene-
fits, postponing your own benefits in lieu of the former spouse’s. (If
your ex-spouse is deceased, you can file for survivor benefits and do the
same thing.) During this time, your own record will be accumulating delayed
retirement credits, and you can switch over to it when you reach age 70 if
it makes sense to do so.
Continued on page 15

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 Want Help From a Professional Adviser?
Here’s Everything You Need to Know
If you want to explore your options as far as
Social Security, expert help is available . . .
and quite reasonably priced, in some cases.
Matthew Allen is co-founder and CEO of
Social Security Advisors, a firm that provides
personalized Social Security claiming
recommendations.
Social Security Advisors offers services at
three price points – standard, deluxe, and
premium – ranging from $24.95 to $124.95.
All clients receive a personalized report,
which clearly spells out the steps to follow in
terms of how and when to file for maximum
benefits.
The deluxe plan offers the ability to run
multiple scenarios, and the premium plan
includes one-on-one time with an adviser.
Allen says most clients opt for the
premium plan.
The goal of Social Security Advisors is to
help clients receive their maximum lifetime
benefits. In fact, the company guarantees it.
“If our clients don’t obtain at least an
additional $10,000 by working with us, we
refund their money,” Allen says.
A typical payoff can be many times that,
he adds. “On average, we are obtaining
$120,000 in additional benefits for most of
our clients. Our lowest has been around the
$30,000 mark.” And the highest? Allen says
the record is $294,283 – so far.
The bottom line for most of Allen’s clients is
the desire to take some complication out of
the retirement planning process.
“We make it extremely easy,” he says. “We
look at all those choices and narrow it down
to their top strategy.”
Special Report Moneynews.com 13
And clients access a broader toolset than
going the do-it-yourself route, Allen says.
“They get to ask all of those detailed
questions that one can’t do, regardless of
how good the software is,” he says. “They
can chat with an advisor about different
scenarios, about whether to continue to work
or not to work.”
Of course, this service also enables the
advisor to ask questions of the client, which
can reveal hidden opportunities.
“It’s the ability to delve into the details
and figure out what’s unique about your
circumstance,” Allen says. “Advisors are
experienced in knowing what really matters
in obtaining the maximum Social Security
benefits.”
Most communication is done easily via email
and phone, Allen says, and they may offer
online meetings with screen sharing in the
near future. Advisors are available in all time
zones across the country, and appointments
can even be scheduled on evenings and
weekends.
Turnaround is fast, too. “We promise
(appointments) within two business days,
but in most cases it’s much quicker than
that,” Allen says.
What a Typical Couple Could Gain
We asked Allen to provide a sample
report so we could see the company’s
recommendations in action.
In this sample, we proposed an average
64-year-old couple, Thomas and Mary, and
had Allen’s firm run a scenario calculating
their maximized Social Security benefits in
light of their projected life expectancies.
 We wanted to know the amounts the couple
could receive if they follow the recommended
strategy versus if each had claimed at the
earliest possible time, age 62.
The results were dramatic. By following the
maximization strategies, this sample couple
could net up to $130,642 more over their
lifetimes.
Sound too good to be true? Here are the
steps and payoff amounts for Thomas and
Mary’s maximized Social Security strategy,
compared with each claiming their own
retirement benefits at age 62 (the strategy
most Americans take):
Step 1: Thomas files a standard application
for retirement benefits at 66 years and 2
months (precisely when Mary reaches her full
retirement age of 66).
This action allows Mary to file a restricted
application for monthly spousal benefits of
$999 under Thomas’ earnings record.
Had she applied for her own
retirement benefits at 62 instead,
she would be collecting only the
portion of the spousal amount that
is higher than her own benefit: just
$66 a month.
70, at which point he starts to collect. His
monthly benefit amount at 70 is $2,639.
Had he claimed benefits at the earliest
possible time, his monthly check would have
been just $1,431.
Payoff: $49,926 in additional retirement
benefits for Thomas and $29,700 in
additional survivor benefits for Mary.
Step 3: At age 70, Mary switches to her own
retirement benefit, which has been allowed
to grow to its maximum amount through
the collection of delayed retirement credits.
She draws $1,187 a month, nearly double the
$644 she would have collected by claiming at
age 62.
Payoff: $21,438 in additional retirement
benefits for Mary.
Grand Total: $130, 642 in additional benefits
for Thomas and Mary.
Lifetime Benefits for Thomas and Mary
$800,000
$600,000

Payoff: $29,578 in additional

spousal benefits for Mary. $400,000

Step 2: Thomas immediately

requests that his benefits be $200,000
suspended (using the file and
suspend strategy), which allows
0
his delayed retirement credits to Best Combination Earliest Possible
accumulate until he reaches age

Ready to maximize your benefits?

Take the first step to a personalized Social Security recommendation at
www.FranklinSocialSecurity.com.

14 FranklinProsperityReport.com Special Report

 Continued from page 12
Switching between ex-spouses. Kiner Special Rules for Some
Pension Recipients
says it’s possible to collect off
any divorced spouse who would give
you benefits. That means if you If either of these situations applies to
were married multiple times (for at you, seek more information at ssa.gov as
least 10 years each), you can claim you plan for your retirement:
divorced spousal benefits as each
If you will receive a pension from work in
ex reaches retirement age. As you
a federal, state, or local government where
may have guessed by now, the catch
you paid no Social Security taxes, it might
is that you can’t get benefits on reduce your spousal or survivor benefits
all past spouses at once, so you through the Government Pension Offset.
should determine which would give
you the highest amount at various If you qualify for both Social Security
and a pension from a job where no Social
times.
Security taxes were withheld, your benefits
There are not as many factors for might be reduced through the Windfall
singles, who lose the ability to Elimination Provision.
coordinate spousal benefits. But
it doesn’t mean you’re out of luck
if you’ve never been married or were married for only a short time. The
following strategies can apply to anyone, regardless of marital status:

Hedge your bets with a protective filing statement. If you’re not sure
when you will want to file, one way to protect your benefits is to submit
a protective filing statement, which is like reserving your place in line
while you park the car. “It’s not an application,” Allen says, “but it will
preserve that filing date for up to six months. And you can keep filing
those statements; there’s no limit.” Perhaps you may be offered a new posi-
tion at work with a higher salary, or maybe not. “It’s a way to hedge your
bets and keep your options open,” he says.

How to file the statement? Kiner says you can register a protective filing
claim with the Social Security office by writing a letter, calling, or
visiting in person.

“File and suspend” to build a cash reserve. Another strategy involves using
the file and suspend option a bit differently than in the scenarios above.
A person can claim and suspend their benefits as a kind of contingency
plan. “If you find out that you need money down the road, you can have
them send you a check for the benefits you suspended. At the same time,
benefits are still growing,” Kiner says. “If you decide to utilize claim
and suspend, it gives you options.”

Another take may be if something happens to affect your health status and
your calculations of longevity. Margenau offers the example of someone who
“has a heart attack at age 68 and thinks ‘Maybe I’d better start taking
benefits now.’ By having filed and suspended at age 66, they have the
option of going all the way back to age 66 and claiming those two years of
back benefits.” Without having filed and suspended, Social Security will
only pay retroactive benefits for a maximum of six months back.

Special Report Moneynews.com 15

 Think You Made a Mistake? There Are Options
If you’ve decided it was a mistake to file early or you want to do something
different, the good news is you have 12 months from the date you file to
change your mind, Allen says. This do-over ability is called a withdrawal
of application. You’ll need to repay all the benefits you’ve received,
but you don’t have to pay any interest, and you can reapply with a clean
slate at a more opportune time. File form SSA-521, Request for Withdrawal
of Application.

“It can undo a bad decision or offset a change in circumstances early on,”
Allen says. The Social Security Administration says you may only do this
once in your lifetime.

If you aren’t able to repay what you’ve received or the 12-month time frame
has expired, there is yet another option for a re-do, once you hit full
retirement age. “If you think you made a mistake by claiming early, you can
suspend your claim,” Allen says.

Remember that one from the spousal strategies above? This is probably how
it was intended to be used. By voluntarily suspending benefits, you start
banking delayed retirement credits from that point, which equate to an 8
percent increase in benefits each year. You’ll want to unsuspend your claim
by age 70, when the credits stop accumulating and it makes sense to start
taking out your money. Some experts call this action “start, stop, start,”
and it can help you build up a higher monthly benefit to enjoy the rest
of your life — and for your survivor to enjoy after.

— Reporting by Kathryn Stewart

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