maximize social security benefits Archives - Flagship Financial Partners LLC

There’s a lot of buzz around Social Security nowadays. A recent study by the Board of Trustees shows that Social Security Reserves could be depleted by 2034, causing many to worry that Social Security won’t be nearly as beneficial to them as it was their predecessors.

Regardless, the fact remains that Social Security is still a CRUCIAL part of your retirement. For some, the funds drawn each month will make up a significant portion of their income. It’s important to get Social Security right. Are you wondering “when should i start taking social security” ? This article might help.

The amount you withdraw monthly from Social Security depends on a number of factors, including when you choose to begin withdrawing it. How do you know when the best time is to begin drawing Social Security benefits?

Currently, the normal retirement age is 66 years and 4 months. At this time, you can begin withdrawing 100% of your monthly social security benefits. However, you are eligible to start withdrawing Social Security Benefits at age 62, with a 25% decrease to your benefit. Conversely, if you wait until age 70, you get a credit for late retirement up to 32% more per month. Here’s an example: a woman that would draw a $1,000 monthly benefit at her normal retirement age of 66 would draw $750 a month if she draws early at 62 and $1,350 a month if she waits until 70 to begin collecting.

In other words, delaying your start of Social Security could be really beneficial in the long run.

However, there are other factors to consider:

Is your current monthly income enough to hold you over until you begin withdrawing Social Security? Can you afford to wait?
Is your health conducive to longevity of life? Waiting to claim benefits doesn’t break even with claiming early until your mid-70’s, so if you don’t think you will live to your mid-70’s, it may be worth it to claim early.
Your spouse. Claiming early decreases spousal benefits, while claiming late increases them. However, your spouse’s benefits may be greater than their spousal benefits, so it may be beneficial for a wife to claim earlier than her husband, or vice versa.

These are just a few highlights, but there are many other factors to consider when deciding when to claim Social Security to maximize your benefits. To help, we’ve created this FREE Social Security calculator that you can find here. For more in-depth guidance, come by our offices or schedule an appointment with one of our experts.

In case you missed it, here’s the FREE Social Security Calculator.

When Should I Start Taking My Social Security Payments?

That’s one of the most common questions we get as advisors. It’s an important question, too.

But a simple Google search on the subject will yield an untold number of experts, far too many to read. Look at just a few of them, though, and you will soon see that each advisor explains Social Security in a different way, and that many of them give conflicting advice. This post discusses a simple way to maximize social security benefits.

social security advice — Source: age brilliantly

There Is A Simple Way to Look at It

Social Security is a complex subject. The absolute best way to handle it will depend on each person’s unique circumstances. But here is a point-of-view that is typically overlooked. We’ll use round numbers to simplify the discussion.

Spoiler Alert – Take the Money Now and Save It for Later

In a nutshell, that is the plan that works best for many people. Let’s work through a common scenario. Let’s use a typical senior as an example. We’ll call her Mary.

Suppose that Mary’s age to receive her full retirement benefit is 66. She can, however, elect to begin receiving Social Security payments at age 62. The drawback? Mary’s monthly check will be reduced by about 25%.

For example, let’s say that Mary would receive $2,000 per month if she waits till her 66th birthday to begin receiving her Social Security payments. At age 62, though, she can start receiving $1,500 monthly. That amount will continue for the remainder of her life.

social security strategies — Source: ebw financial planning

The Common Advice is Wrong

Most advisors would tell Mary to wait the four years till she is 66 to start collecting her payments. They would say that gives her a better ‘rate of return.’ And maybe, by looking only at the numbers, that might be true. But what is being overlooked?

Money ‘In the Bank’ Now is Better Than Money in the Future

If Mary waits four years, she is giving up 48 monthly Social Security checks of $1,500 each. That amounts to a whopping $72,000!

If Mary does not need the money, she can simply deposit it into her bank account and build a nice nest egg. That’s a great plan for people who don’t have a lot of savings as they near retirement.

how to maximize social security benefits — Source: real daily

Our favorite investment, though, would be to deposit those checks into a nice fixed annuity. Her money would earn a lot more interest than it would in a bank, and Mary would still have a guarantee against market loss.

Mary Could Still Earn Money If She Wanted to Work

Mary could work part-time and earn up to about $17,000 (round numbers) without her check amount being reduced. Great. And if she does earn more than that, only one dollar out of every two (above the $17,000) would be penalized.

Penalty is not a good term, though. Any reduction in her checks would be credited to her Social Security numbers when she reaches full retirement age, in her case age 66. So, she would get some of it back.

maximize social security benefits — Source: debt.com

If You Don’t Need the Money, But Have a Low Income, Take It Now

Does that description fit you? If so, you might want to consider taking your Social Security payments before you reach your full retirement age. As always, don’t jump into a major decision before you talk it over with your trusted advisor.

If you don’t have a trusted adviser, we’d be happy to talk it over with you.

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