Retired Women Need Basic Knowledge on Social Security and TRiiP Plan to Secure a Comfortable Retirement

I continue to get a lot of questions about the unusual Social Security claiming strategies that I (and others) have written extensively about over the past couple of years. It turns out that you can give yourself a 67% raise in monthly Social Security benefits by just filing the right paperwork the right way. The two strategies of "claim and suspend" and "claim now and claim more later" are becoming more and more popular as they become better understood. It's true that they only work for married couples. But as I explained in a previous article, they aren't just for couples that are currently married…they also work for anyone that has ever been married as well. That means they also work for divorced and widowed individuals. Just to recap some of the things I pointed out in a previous article on Social Security benefits and divorce:

* Exes can still receive a spousal benefit. Provided you were married at least 10 years, you are eligible not only for a Social Security benefit based on your own work record, but also a benefit based on your exes work record. Divorce doesn't change anything in that regard.

* "Switch Strategies" are still in play. That means the strategies of "claim and suspend" or "claim now and claim more later" are still an option.

You might start by collecting a benefit on your exes work record. This allows you to earn the 8% per year growth on your own benefit. When your benefit surpasses the benefit you are collecting on your ex-spouses work record, you switch to your own higher benefit (claim now and claim more later)! This simple strategy of switching between benefits adds an average of $130,000 in lifetime benefits to recipients of Social Security. Pretty amazing. So what about widowed individuals? Social Security is generous when it comes to taking care of a surviving spouse. Generally, the "survivor benefit" is available to anyone who was married at least nine months to a "deceased worker" (someone who qualified for Social Security based on their work record). Social Security pays the survivor the higher of their own benefit or the "deceased worker's" benefit. It's possible for the survivor to maximize the benefit they will receive by utilizing one or the other of the "switch strategies" we've been discussing. For example: Suppose a wife (age 66) is entitled to $1,800 per month in Social Security benefits when her husband dies. He was entitled to $2,000 per month. Her best strategy would be to take his benefit of $2,000 per month while letting her $1,800 grow by 8% per year until she is age 70. At that point she could switch to her own higher benefit of $2,376 per month. Not bad. But it's important to recognize that she can only maximize the one benefit. And one Social Security check can never fully replace two Social Security checks. I'm always reminded when I speak to those who are widowed that a deep personal loss is often accompanied by a sudden financial hardship as well. That's why I was intrigued (and excited) when in the course of doing some research for this article I stumbled on something called the TRiiP strategy. The TRiiP strategy wasn't originally designed to replace the Social Security income that is lost when a spouse passes away. Originally it was designed as a hedge to protect someone's investment income from inflation and long-term care costs. But some smart people found a way to use the TRiiP plan to protect all kinds of income in all kinds of ways. That means you can now protect your Social Security income from being drastically cut when one or the other of you passes away. TRiiP is an inexpensive insurance hedge. It's something that has only been around a couple of years. And it isn't necessarily run-of-the-mill. Like any hedge, the TRiiP has to factor in things like longevity, micro and macro-economic variables like tax rates and interest rates, and has to be customized based on the guarantees someone wants to include. But it's an intriguing option that is becoming increasingly popular. My advice would be to talk to your financial advisor about the TRiiP if your Social Security income plays any part in supporting your retirement lifestyle.

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