Retirement Guys: Timing Social Security benefitsWritten by Nolan Baker Mark Clair | | firstname.lastname@example.org
In our Jan. 24 column on “The big Social Security mistake,” we pointed out that 729 possible combinations exist for when to draw Social Security benefits.
The difference between the best and the worst possible elections can mean the difference between tens if not hundreds of thousands of dollars of income during a typical retiree’s lifetime. Figuring out the best approach for you comes down to running the numbers for your unique situation using a Social Security calculator. Since that time, tons of our readers have used the calculator we posted on www.RetirementGuysRadio.com. In this column, we want to share with our readers some of our recent findings.
Drawing Social Security benefits as soon as possible or right away at retirement can be a huge mistake for many families. The main reason is the fact that for many retirees who start benefits before full retirement age, often age 66-67, a lifetime reduction for taking benefits early applies. According to www.ssa.gov, the benefits could be reduced by as much as 32.5 percent by drawing them early. The government website also points out that Social Security benefits count for 39 percent of the income for a retiree. Drawing early, especially for a high-income family, can be a double whammy for a spouse’s options because it could reduce the lifetime amount a spouse could receive as well. Remember to know all the options and review the sources of income available before electing benefits.
Consider waiting a while after retirement to start taking Social Security benefits. After an individual has reached maximum retirement age about an 8 percent per year increase is given to those who wait, up till age 70. Although no one knows God’s plan, considering family genetics and an individual’s own health can help us make a smart decision on when to start benefits. Many people we have talked with know that Social Security is broke and assume they should just get what they can now. Tough decisions need to be made by the government on how to make Social Security solvent in the long term. Yet we believe for many retirees close to or in retirement, this benefit will remain for a long time. Don’t just rush into getting money in your hand now.
Many retirees that work for a government agency could be blindsided by a provision called The Windfall Elimination Provision. This could also affect a spouse in what is known as The Government Pension offset. In 2013, benefits can be reduced by as much as $395.50 a month due to these rules. The key is not only knowing the rules, but figuring out a family’s substantial earning years. For readers who do work for the government or have a spouse who is eligible for a government pension, take extra time to know how the rules apply and determine your best approach on drawing benefits.
The good news is Social Security has been here helping American families since 1935. Generations of Americans have already benefited from this system. Thanks to the hard work of you and others, we have taken care of generations of Americans. It is because of you and me that we have been able to help secure the American dream for so many people and provide a safety net for those who have no other income sources. The contributions of all of us has made a difference.
For those close to or moving into retirement, the good news is you still can decide when and how to draw Social Security benefits. Don’t make the decision lightly; take some time and run the numbers for your family. If you want to find out what’s at stake, stop by our website at www.RetirementGuyRadio.com and run the numbers.
For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1370 WSPD or visit www.retirementguysnetwork.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc. does not provide tax or legal advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. (419) 842-0550