Just came across another wrinkle in managing Social Security (SS) benefits via a neat advise service from BottomLine.
The gist of it is to be sure to file for your SS benefits when you are at full retirement age (FRA), even though you do not plan to collect until later years (70?)--the so called file and suspend strategy. By filing and suspending at FTA you are able to immediately start protecting your "lump sum" option. Under this strategy your suspended benefit is accummulated into a lump sum benefit that you can collect whenever you decide to start collecting. This benefit is particularly helpful should you find out prior to say 70, you have an immediate cash need or terminal illness.
The example given was for a person whose SS Benefit at RTA was 2000/month. He files and suspends at FRA (66)but then finds out he has a terminal illness at 69. He requests the lump sum, and gets his three years of suspended benefit (apprx $72K) and two additional months benefit (at the rate he would have gotten at FRA) checks prior to passing.
Net advantage is he would receive $76K, instead of just the $4-5k had he just filed when he received his bad health news.
One things I did notice in this example from Bottomline is that they did not fully account for the higher monthly benefit from delayed filing at the later age but the examples still illustrates the advantage of having the aqbility to access the lump sum
Nwsteve
The gist of it is to be sure to file for your SS benefits when you are at full retirement age (FRA), even though you do not plan to collect until later years (70?)--the so called file and suspend strategy. By filing and suspending at FTA you are able to immediately start protecting your "lump sum" option. Under this strategy your suspended benefit is accummulated into a lump sum benefit that you can collect whenever you decide to start collecting. This benefit is particularly helpful should you find out prior to say 70, you have an immediate cash need or terminal illness.
The example given was for a person whose SS Benefit at RTA was 2000/month. He files and suspends at FRA (66)but then finds out he has a terminal illness at 69. He requests the lump sum, and gets his three years of suspended benefit (apprx $72K) and two additional months benefit (at the rate he would have gotten at FRA) checks prior to passing.
Net advantage is he would receive $76K, instead of just the $4-5k had he just filed when he received his bad health news.
One things I did notice in this example from Bottomline is that they did not fully account for the higher monthly benefit from delayed filing at the later age but the examples still illustrates the advantage of having the aqbility to access the lump sum
Nwsteve