Social Security Strategies: Double Dipping

(MoneyWatch)  (Note: This item is part two of a series on strategies for taking Social Security benefits. For other posts in the series, see the link at the bottom of the item.)

The temptation to take Social Security benefits as soon as you're eligible can be hard to resist. But delaying your benefits can mean getting increased benefits down the road, especially if you can employ a strategy for collecting those additional benefits.

The strategy we'll discuss today is called "double dipping." Like the file and suspend strategy we discussed on Wednesday, this is another strategy for married couples. It is important to note that this strategy does not apply to government workers. Double dipping refers to the ability to draw your spousal benefit and your regular benefit at different points.

To double dip, you must file specifically for the spousal benefit when you file, so make sure this is clearly stated on your application. If you're eligible for both a spousal benefit and your regular benefit, the Social Security Administration will assume that you are filing for both benefits when you file, and it will simply give you the higher of the two. Obviously, you can only draw one at a time, but it may make sense to take your spousal benefit (even if it's smaller) for a few years, then take your regular benefit later.

Here's an example of why this may be a good idea. When Mary reaches full retirement age, she can either file for her own benefit of $1,100 per month or her spousal benefit of $1,000 per month. Seems like a pretty simple decision to choose her own benefit, right?

But remember, your monthly benefit amount will grow if you delay taking it. In Mary's case, her regular benefit would grow to $1,452 per month if she delays taking it until age 70. By accepting a smaller benefit for a few years, she would receive a much larger benefit for the rest of her life.

Like I mentioned on Wednesday, it's important to consider any outside factors that may impact this decision. Also, you should contact the Social Security Administration to figure out your estimated benefits. A good financial adviser should be able to help you determine if this strategy would be good for your situation.

For further reading on Social Security, see the following posts:

• File and Suspend
• Double Dipping
• Former Spouses
• How Are My Benefits Calculated?
• Single Filers
• Understanding the Spousal Benefit
• Government Pensions: Offset Provision and Windfall Elimination Provision
• The Issues with Taking Benefits Early and Investing Them