10 Bizarre Things About Social Security - Part 3: How to Get a Large Lump Sum Check from Social Security
If you are older than your Full Retirement Age and have not claimed your Social Security benefits yet, listen up. You have the option of requesting a lump sum check for 6 months of back payments. Depending on the size of your monthly benefit, that lump sum check could be quite substantial.
More people are delaying the claiming of their Social Security benefits at least up to Full Retirement Age if not longer. If you wait this long to claim your benefits, Social Security will offer you 6 months of back payments in one lump sum check. If your monthly benefit is relatively large, that lump sum check could pay you a lot of money.
Here's how it would work.
How The Lump Sum From Social Security Works
Let's assume that a Husband and Wife are both age 67. They both have a Full Retirement Age of 66 and neither of them have claimed their benefits yet.
Husband’s Age 67 Benefit = $3,000
Wife’s Age 67 Benefit = $2,000
His Social Security benefit statement says he will receive a monthly benefit of $3,000. The Wife's statement says her monthly benefit is $2,000. They both decide to claim their benefits at their current ages of 67.
When they go to claim, Social Security will offer them the 6 months of back payments.
If they both choose to receive the lump sum check, then their monthly benefit will be slightly reduced. The amount they would receive going forward is what they would have received if they claimed their benefits 6 months earlier. Basically, Social Security would go back by 6 months, because they took the lump sum check for 6 months of back payments.
How would the Lump Sum Affect my Monthly Benefit Amount
Their monthly benefit amount would be approximately 3% -4% less than the amount they would have received if they refused the lump sum check.
After Lump Sum Check:
Husband's Monthly Benefit = $2,889
Wife's Monthly Benefit = $1,926
So if they both take the lump sum check, the husband's benefit would be reduced by approximately $111 per month. The wife's benefit would be reduced by approximately $74 per month.
Size of Lump Sum Check
Husband ($2,889 × 6) = $17,334
Wife's ($1,926 × 6) = $11,556
Combined Total = $28,880
The trade off for those slightly reduced monthly benefits going forward would be receiving lump sum checks totaling $28,880.
The Husband would receive a lump sum check of $17,334 ($2,889 × 6 = $17,334) and the Wife would receive a lump sum check of $11,556 ($1,926 x6 = $11,556).
Adding those two lump sum checks together results in a combined total of $28,880.
A lot of married couples would be willing to receive the lump sum for a smaller monthly benefit.
You do not have to be married to do this! It also works this way if you are single, Divorced, or a Widow.
If you like this idea and if you are older than your Full Retirement Age when you claim your benefits and Social Security does not offer you the opportunity to receive a lump sum check for 6 months of back payments, then you need to ask them for it.
This is Part 3 of a 10 part series. Keep your eyes open for more Social Security tips and advice coming soon.
1: Your Ex-Spouses Could Receive Your Full Social Security Benefit If You Die Before Them
2: Social Security’s Viagra Benefit
4: Divorces Could Greatly Increase Your Social Security Income
5: Even In Poor Health, You May Want To Delay Social Security
