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The Journey: Social Security numbers to know

Janet Kidd Stewart, Tribune News Service on

Published in Home and Consumer News

The 2 percent cost-of-living hike in Social Security benefits this year isn't the only number affecting workers and retirees.

Workers will pay more into the system – the taxable maximum rises to $128,400, an 8 percent increase from just two years ago.

Earnings thresholds for withholding benefits of recipients under full retirement age also are increasing, meaning they can earn more before their Social Security checks are temporarily reduced. For people born in 1943 through 1954, benefits are reduced by $1 for every $2 earned above $17,040. The limit for people turning 66 this year is $45,360. Above that amount, $1 in benefits is deducted for each $3 earned.

Beyond decoding how these inflation-linked numbers affect your situation, now is a good time to think about the other numbers involved with Social Security planning.

While the government has been chipping away at some of the more popular claiming strategies in recent years, it still pays to consider carefully the best time to file, experts say, particularly if you were ever married a decade or longer, qualifying for spousal benefits.

Consider a sixtysomething couple. They don't know the most important number of all in terms of knowing when to claim benefits – their dates of death – so they'll need to ponder a host of other factors:

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1. Speed kills. Grabbing benefits the moment they are available, even if they aren't absolutely needed, can be a big mistake.

"So many people just never learned delayed gratification," said William Reichenstein, research director for Social Security Solutions Inc. and a Baylor University finance professor.

I asked Reichenstein and Marcia Mantell, founder of Mantell Retirement Consulting Inc., to walk through the claiming strategies for a hypothetical couple. One member of the couple is a high earner, still working and on pace for maximum monthly benefits of around $2,700 at full retirement age. The spouse is due to receive about $1,000 at full retirement age. For simplicity's sake, they didn't consider inflation or the impact on benefits of working before full retirement age.

If these spouses both claim as soon as possible, at age 62, and live at least until age 85, they'll earn almost $100,000 less in benefits than they would have if the low earner had claimed at 62 and the high earner waited for delayed retirement credits by filing at 70, according to an analysis by Reichenstein.

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