My February column, “18 Social Security Surprises Facing Advisors, Clients” generated a bit of reader mail so I thought I’d piece together a few more of the quirks from one of our country’s most complex programs. Here’s a couple dozen to ponder.

1. Sure, if clients wait to start retirement benefits, their monthly check is larger, but many don’t realize just how big the increase can be. If they wait until 70 to collect, the benefit can be up to 76 percent more than what would have been received at 62. That’s a substantial increase from an action that doesn't create any market risks. The increase comes from avoiding the “early retirement reduction” and getting “delayed retirement credit.” If clients work after age 62, Social Security’s re-computation of benefits may increase the benefits even more. 

2. For delaying the start of retirement benefits for the higher earner, the effective return a couple can make is easily among the best available for a low risk “investment.”

3. If clients regret starting retirement benefits within the first year, they can withdraw their application and repay all the benefits received. It will be a complete “do-over” as though they never filed.

4. Even if a client starts retirement benefits early, once she reaches her full retirement age (FRA), she can suspend benefits. She will earn delayed credits (8 percent per year) from that point until she lifts the suspension. This is often called “start stop start.” This can be quite handy for those who wish they had not started early but are past the 12-month window to withdraw an application.

5. Start stop start can be handy also for couples with a particular age difference that doesn’t allow for file and suspend. You must also reach your FRA to file and suspend.

Consider a couple whose FRAs are 66, but the high earner is four years younger than the low earner. The high earner may not think to start retirement benefits at 62 due to the reduction of the benefits.  At that point the low earner would be 66, but can’t get a spousal benefit because spousal benefits are only payable when the other spouse is collecting or has filed for and suspended benefits.

The 62-year-old high earner can claim early and the 66-year-old can collect a spousal benefit.  Four years later, the high earner can suspend benefits and earn delayed credits up to age 70.  Depending on the amounts and life expectancies, this can work out in the couple’s favor.

6. The exact amounts matter for other benefits as well, like those for survivors. Some widows/widowers will do better taking their survivor benefits at 60 and their retirement benefits at or after their FRA. For others, they receive more doing the opposite, starting their retirement benefits early and taking survivor benefits at their FRA.

7. If a client starts collecting her retirement benefit before 70 but after full retirement age, her monthly check won’t reflect the full delayed credit until the next January.

8. If a client is married, only she or her spouse can receive spousal benefits at a time. The other would be receiving (or have suspended) their own retirement benefit.

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