Social Security Planning

What if I told you that not knowing enough about Social Security could cost you tens, if not hundreds of thousands of dollars? What if I told you that having a better understanding of this program could lead to an extra $150,000 in retirement? In 2014, over 59 million Americans will receive almost $863 billion in Social Security benefits. The average monthly benefit for retired workers is roughly $1,294 per month. ( Most of those people don't realize their monthly income could have been substantially higher if they delayed beginning their Social Security even by one year. As baby boomers transition from the accumulation phase to the distribution phase of their lives they are looking for a way to continue receiving a steady paycheck and maintain their current lifestyle. Unfortunately for most, the income they receive from Social Security, pensions, and other sources of income is not enough. By truly understanding Social Security and all the options you have available you can make better decisions for you and your family. Even if you have already started taking Social Security there are concepts that you may be able to implement to make your retirement more financially comfortable. Over the next few blog posts we will address the following:

Social Security: 5 Key Questions You Must Be Able to Answer
  • Now vs. Later: Based on your personal situation, what year is best for you to begin receiving social security retirement benefits?
  • Spousal Planning: What options do married couples have when it comes to Social Security and are you choosing the one option that will provide you and your family with the most income?
  • The Impact of Working in Retirement: If you make some additional income during your retirement years how is it going to affect your Social Security retirement benefit?
  • Social Security Taxation: Do you know how much your Social Security is being taxed and the strategies you can use to reduce your tax bill?
  • Filling the Income Gap: If your Social Security, pension, and other sources of retirement income do not provide you with the lifestyle you had hoped for, how much of your retirement nest egg do you need to use to guarantee the additional income that you are looking for.

This post we will focus on Now vs. Later and what this means for you!

Social Security: What is Full Retirement Age?

First, you need to understand your “Full Retirement Age (FRA).” When Social Security was initially set up, the full retirement age was 65, and it still is for people born before 1938. But as time has passed the age for receiving full retirement benefits has slowly crept up. If you were born between 1938 and 1960, your full retirement age is somewhere on a sliding scale between 65 and 67. Anyone born in 1960 or later will now have to wait until age 67 for full benefits. Once you have reached your FRA you are entitled to receive 100% of your Primary Insurance Amount, or PIA.

Social Security: What is PIA?

What is your PIA? That is the number one question everyone is asking, only they say, “How much am I going to get?” There is no easy answer to this question. The Social Security Administration uses a complex series of formulas and calculations to come up with your PIA. Nearly every other calculation in Social Security is based on this number. So once we've determined your PIA we can figure out just how much you will actually get and answer a lot of other questions. Determining your FRA and PIA is only the starting point. The second most common question people ask is: “When should I start taking social security?” You can begin collecting benefits as early as age 62, but the amount will be permanently reduced – up to 30%. You can also delay receiving benefits up to age 70, in which case your benefits will be higher for the rest of your life. The Social Security Administration allows a person's benefit to roll up at 8% per year from your FRA to age 70. There is no point to delaying beyond 70, as the benefit will be maxed out and no longer grow. So, the choice is yours. When it comes to actually starting your Social Security Retirement Benefits, timing is everything.

Customized Social Security Analysis

We are here to help you make a more informed decision concerning your entitlement.  We can show you how much you are projected to get at various ages, the breakeven points between those ages and the best way to get more from Social Security and how it can fit into a comprehensive retirement plan.