As the second largest city in the state with a population of more than 200,000, Spokane has a lot to offer. Last year, Huffington Post ranked Spokane as one of the top 10 cities to retire given the city’s weather, affordable housing, and local culture and events. 

Spokane will only continue to see significant regional changes during the next several decades due to the aging of the boomer population. And with more than 78.2 million baby boomers in the U.S., many of you are most likely considering what ideal retirement will look like and the steps required in achieving it. One piece of that retirement picture is likely to be the role played by your Social Security benefits.

The Social Security Act passed in 1935 and was established to ensure “… the security of the men, women, and children of the nation against certain hazards and vicissitudes of life.”  In other words, it was intended to be a safety net for Americans in the event of extreme financial hardships.

Since then, the law has evolved and the retiring population’s reliance on this system has continued to expand to the point where it is now a primary—and often the only—source of income for many people in retirement.  This has placed a good deal of financial strain on the program to the point that it is no longer sustainable long term.  In recent years, we have seen changes to the program, such as raising the full retirement age and providing retirees with the option to defer receipt of their benefits in exchange for an increased benefit amount in future years. 

Given these changes, there are opportunities to plan today. Here are five ways to help maximize benefits available through the program.

Defer receipt of your benefits. One of the most common strategies for increasing monthly Social Security benefits is to defer when you choose to begin collecting them. A person born between 1943 and 1954 has a full retirement age of 66 but can elect to begin collecting benefits at reduced level as early as age 62. By waiting until they’re 66, retirees can avoid the 25 percent permanent decrease in their benefit amount and continue to earn the annual cost-of-living adjustments that will accrue until their full retirement age.  

Take a spousal benefit. For married couples in which one person has substantially more lifetime earnings than the other, there is an option for the lower-earning spouse to collect spousal benefits in lieu of their own retirement benefit.

Generally, a nonworking spouse is able to collect up to 50 percent of the working spouse’s full retirement benefit.  When a lower-earning spouse reaches full retirement age and wants to begin collecting benefits, he or she can compare earned benefit to the amount of the spousal benefit and choose to collect the larger amount. In the case of divorced couples, they also have the ability to claim spousal benefits on an ex-partner’s earnings record if they were married for at least 10 years, are at least age 62, and haven’t remarried.

File and suspend. Another strategy to consider is commonly referred to as file and suspend. This strategy is most beneficial for married couples where one spouse has a higher earnings history, and both are of relatively similar age. For this, a higher-earning spouse files for benefits upon reaching full retirement but suspends the collection of those benefits until a later time. The lower-earning spouse then can file for and collect a 50 percent spousal benefit while the higher-earning spouse’s benefit continues to grow during the suspension period. 

Be careful when earning income and collecting benefits. For those who collect benefits before full retirement age and continue to work, benefits might be reduced by a portion of earnings. The reduction in benefits is withheld and will be taken into account when recalculating benefit upon reaching full retirement. Do consider, however, that a portion of the benefits may be taxable based on the amount of combined income on a joint tax return that year.  

Plan ahead and review options. The optimal strategy for collecting Social Security benefits will vary greatly depending on each person’s individual circumstances. The age and earnings history of each spouse as well as other sources of cash flow and even health issues can influence the decision. As noted above, the program has also grown since its inception into something larger than was originally anticipated, and it’s likely that there will be changes in its structure in the future as well.  

As things change, it’s critical that new factors be taken into account and that the strategy you select makes sense in the context of your long-term overall financial planning.

Ryan Franklin is a Yakima-based certified financial planner and a senior financial adviser with Moss Adams Wealth Advisors LLC.