Updated Saturday, November 1, 2014 as of 5:00 AM ET

Social Security: When Waiting Doesn’t Pay

We’ve been saying all week that clients should wait to collect benefits from Social Security. But there is actually an exception. And it has to do with the relationship between Social Security and Medicare. Or, specifically, one part of Medicare. It’s just one more aspect of the Social Security program you need to know in order to serve clients.

This labyrinth of rules is one reason that Bank Investment Consultant has been offering tips and videos over the past week on the sprawling federal program. Specifically, we’ve been focusing on how to manage your clients’ benefits.

We asked regular magazine contributor Dave Lindorff to research and compile a set of tips for advisors. So far, we’ve presented 17 and today we have the final three. We hope you have found them useful. Give us your own insights and your tips on how you help clients who are dealing with Social Security.

Medicare Part B can pose risks when it comes to delaying filing for Social Security beyond 66.

One potential problem with delaying collecting Social Security beyond 66 is that Medicare Part B costs can rise considerably faster than inflation. For people with modest taxable retirement income, Medicare Part B premium increases are limited by Congress to the increase in Social Security benefits in a given year. If you are deferring collecting those benefits, and Part B costs jump, that jump is permanent and you’ll be paying it, and incremental future increases, for life. If you had already been collecting Social Security, the Part B increase this year would have been limited to just 1.7%—the amount Social Security benefits were raised.

Spousal and survivor benefits are calculated based upon a spouse’s full-retirement benefit amount.

There is no advantage to be had in delaying collecting either of these types of benefits beyond your own reaching of full-retirement age.

Both spouses can draw spousal benefits on the other’s account.

In cases where both spouses have similar earnings histories, and are expecting to receive similar benefit payments, it could be advantageous for each to file for spousal benefits on the other spouse’s Social Security account, allowing both of them to defer collecting on their own accounts until age 70.

 CHECK OUT MORE WAYS TO SIMPLIFY SOCIAL SECURITY FOR YOUR CLIENT

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