Get What's Yours - Revised & Updated: The Secrets to Maxing Out Your Social Security (The Get What's Yours Series) - Hardcover

Über die Autorinnen und Autoren

Laurence J. Kotlikoff is a professor of economics at Boston University and president of Economic Security Planning, Inc. His company websites are ESPlanner.com and MaximizeMySocialSecurity.com. To learn more, visit GetWhatsYours.org.

Award-winning journalist Philip Moeller coauthored the New York Times bestseller Get What’s Yours: The Secrets to Maxing Out Your Social Security and is the author of the companion volumes, Get What’s Yours for Medicare: Maximizing Your Coverage, Minimizing Your Costs and Get What’s Yours for Health Care: How to Get the Best Care at the Right Price. He wrote the “Ask Phil” feature for PBS NewsHour and has also worked for Money and US News & Report as well as several newspapers. He writes the Get What’s Yours newsletter on Substack and provides updates on Medicare and Social Security at his website, GetWhatsYours.org.

Paul Solman is the business and economics correspondent for the PBS NewsHour and is a Brady-Johnson Distinguished Practitioner in Grand Strategy at the International Security Studies department at Yale University.

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Get What’s Yours

1

WHY WE BOTHERED

The first version of this book began with a catchy true story of a simple Social Security strategy: how, during a break in the exercise coauthors Larry and Paul refer to as “tennis,” Larry made a completely legitimate $48,000 for Paul in less than two minutes by instructing him on how to get his. The rest of the book guided readers through the various steps and strategies necessary to get theirs as well, using other real-life stories, plausible hypotheticals, and humor, to the limited extent we could make Social Security amusing.

The book’s deep purposes were broad: to make our fellow Americans aware of how little they knew about the country’s most important retirement program; to make them aware of how critical it was to their own financial future to understand the system’s basic contours, as well as its nooks and crannies; and finally, to demystify Social Security’s paralyzing complexity so that literally anyone could navigate it.

But when it comes to getting what’s yours, our main objective was to convey—no, to beat you over the head with—one strategy above all others: patience, and the huge potential dollar return from waiting to collect massively larger benefits starting at older ages, regardless of your age, marital status, or earnings history.

A VIVID EXAMPLE OF THE PATIENCE PAYOFF

Consider a 62-year-old couple who both stop working at that age, each having earned above Social Security taxable FICA limit—the maximum taxable amount—from age 22 on. They would jointly receive about $50,000 a year if they both began taking benefits at 62 (the earliest age at which you can collect). To generate the same amount of annual income from investments, assuming a return of 2 percent a year above inflation, they would need a nest egg of over $1.3 million—more than many upper-middle-income retirees have saved by retirement age. (The net worth of a typical household headed by someone aged 65 to 69 is only a fifth of this amount and much of it is in the value of their home.)1

Of course, $1.3 million is a lot of money. But—and here’s the key takeaway—it’s much smaller than what the couple can get by maximizing their Social Security benefits. Because, if they make the right decisions, they can increase the value of their lifetime Social Security “asset” to more than $1.7 million!

All the couple must do is wait until age 70 to start collecting their retirement benefits. If they do, Social Security will pay them benefits that are a whopping 76 percent higher than their age 62 benefits. And yet, according to the latest data, less than 2 percent of Americans wait until 70 to collect. (In Chapter 2, we will note some important exceptions to our Patience Rule. But we will also demolish the arguments of those who think they know better than to wait.)

AN UNFORTUNATE EVENT

Less than nine months after the first edition of Get What’s Yours was published, the government decided to rewrite Social Security rules. On November 2, President Obama signed into law the “Bipartisan Budget Act of 2015.” Under the arguably disingenuous heading “Protecting Social Security Benefits,” the new law modifies several former provisions, most prominent among them the simple “file-and-suspend” strategy Larry had shared with Paul across the net. After six months from the signing of the bill, the “file-and-suspend” strategy would be severely restricted. This book will tell you all about the new provisions and help you understand the extent to which they will or won’t affect you.

Thanks to the new law, the 62-year-old couple we mentioned can no longer collect one full spousal benefit between full retirement age and age 70 while waiting until 70, as Larry had advised Paul over tennis. Still, many married couples and divorcees remain eligible over the next 4 years to follow Paul’s strategy.

But here’s the good news, and a key reason we felt compelled to rewrite and present this revised edition of Get What’s Yours: the strategy that earned Paul and his wife $48,000 may still work for many couples and divorced individuals both of whom were 62 or older by January 1, 2016, but not yet 70, and who are not the same age. There are, by our rough reckoning, millions of you out there, millions of Americans who will be “grandparented in” and therefore still able to employ the strategy Larry advised Paul to adopt. And while our 62-year-old couple, who turned 62 too late, will lose roughly $60,000 because of the new law, they will still gain about $400,000 from maximizing strategies still in effect.

Moreover, the rest of the book’s suggestions and strategies remain true and invaluable: be patient; become aware of and then learn how to take all the benefits to which you’re entitled (and may never have heard of); time your various benefits to make the most of them; and overall, understand Social Security’s rules well enough to make the best decisions for you and your family, since you really can’t rely on Social Security to do it for you.

Social Security’s unreliability was something we knew about when writing Get What’s Yours, but we have had it impressed upon us time and time again since publication as plaintive readers write to us to complain of having been given bum advice. One reader even gave us a single star on Amazon for having given her “wrong advice,” because her local Social Security office assured her we were wrong. We weren’t, and Larry got the review removed and, we hope, straightened out the reader’s benefits. In defense of Amazon reviewers, however, another one said he had learned a great deal from our book—and identified himself as a Social Security representative.

But since the strategy Larry shared with Paul—and that coauthor Phil Moeller and his wife, Cheryl, are using—still applies to millions of Americans for the next four years, what exactly is it? Here’s the original story.

BAD TENNIS, GOOD STRATEGY

Back in 2010, as Larry and Paul had taken a break from what they optimistically call tennis, Larry launched into a harangue, as he often does; this one was about Social Security’s maddening complexity. Paul listened with his skeptical journalist’s ear. Or, maybe, since it was a Larry harangue, just half-listened.

Then Larry popped the question: how old were Paul and his wife and when did they plan to take their Social Security benefits?

Proudly, Paul told Larry not to worry: he and his wife had it all figured out. They would both wait until 70, when Paul would get something like $40,000 a year instead of the $30,000 or so if he took his benefits earlier at 66, his “full”—but not “maximum”—retirement age, which was in fact just around the corner. Paul had for years been reading and filing away those annual greenish statements from the Social Security Administration with their “Estimated Benefits.” He’d been reading his wife’s, too.

How old are you and Jan? Larry asked.

Paul’s wife would soon turn 67; he, 66.

Here’s what you do, said Larry, never at a loss when it comes to speaking in the imperative. Jan should apply for her Social Security retirement benefit now, since she is already 66, but then “suspend” it. That is, she makes herself eligible for the benefit by officially...