This allows those higher benefits to continue to grow until the person reaches age 70. The spouse, if he or she is at least 62 years of age, can file for spousal benefits under the higher wage earner’s record.
“This is a spousal planning opportunity that preserves the maximum benefit for one spouse while allowing the other to receive some benefits,” he says.
Social Security benefits are calculated on an earner’s 35 highest earning years. The maximum annual earnings considered for Social Security benefits are $113,700 for this year. If an earner made the maximum amount or more for the entire 35 years, he or she would receive the maximum benefit of $2,533 for a retiree at full retirement age, Steffen says.
Some wealthy people feel they should take Social Security as soon as possible because they fear the government will eliminate or reduce benefits.
“While some individuals do believe they need to ‘get it while they can,’ we emphasize that the reform proposals we’ve seen floated are usually designed to not affect those over age 50,” Steffen says.
Although the income taxes due on Social Security benefits are of less concern to the wealthy than to those with modest retirement incomes, even wealthy people should be aware they are going to have to pay income tax on their benefits, Steffen says. Individuals earning more than $34,000 and couples earning more than $44,000 will have to pay income tax on 85 percent of their Social Security benefits, according to the government website, www.ssa.gov.
Advance planning is the key to getting the most out of Social Security. “You need a few years of planning ahead of time to know what makes the most sense, even for high-net-worth individuals and couples,” Steffen says.