Social Security and Life Expectancy

From the Desk of Charlie McCullough

Charlie McCulloughHaving aging parents who are collecting social security benefits has made me consider how long these benefits will be available and if my wife Lisa and I will be able to count on them for our retirement.  When I talked to my financial advisor at Financial Fiduciaries, he told me that social security can be a very complicated thing because there are a lot of variables to consider.

Longevity is one of the biggest factors to think about. According a recent article I read, half of individuals in upper income brackets will live to be at least 95 years of age. That could be concerning for individuals who are counting on social security as their main source of income during retirement, but it also is cause for consideration for anyone who is nearing retirement age. With that in mind, here are a few things to think about when planning a timetable for claiming social security benefits.

  • Timing is Everything – My advisor told me that age has a big impact on the amount of money you will receive from social security benefits. While you are able to claim your benefits when you reach your full retirement age (between ages 66 and 67 depending upon your birth year), if you wait until age 70, the amount of benefits received increase. Many people might be tempted to take benefits as early as possible, but doing so could be a losing proposition if you are healthy and live to or past the average life expectancy.
  • Delaying benefits – When you hit full retirement age, you can choose to delay benefits. Doing so will grow your benefits by 8% a year up until age 70. Any cost-of-living adjustments will be included, too, so you will not forgo those by waiting.
  • Spousal Benefits – Under new laws, spousal benefits cannot be claimed until your spouse files for and receives their benefits. This means, if you don’t have a work history, waiting until your spouse files can cost months or even years of lost spousal benefits.
  • Survivor Benefits – If your spouse dies first, you are eligible for survivor benefits. At full retirement age, the benefits are worth 100% of what your spouse was receiving at the time of their death, or if they had not yet taken benefits, you are eligible for 100% of what they would have received.
  • Divorce and Spousal benefits – Just because you are divorced does not mean an inability to claim benefits based on your former spouse’s earnings record. If you were married at least 10 years, are 62 or older and single, you can still qualify to receive a benefit.
  • Claimers remorse – If you claim your benefits and then change your mind within the first 12 months of making the claim, you can withdraw the application. You will need to pay back all the benefits you received, including spousal benefits, but you can restart at a higher amount at a later date.

These are just a few of the many considerations when claiming social security benefits. For the best information, I suggest contacting a trusted financial planner to create a plan that fits your specific retirement needs.

Charlie and Lisa McCullough are fictitious characters who are utilized to illustrate situations in which people might find themselves.  Their family and friends are also fictitious.  While their stories are inspired by actual situations encountered by Financial Fiduciaries professionals working with clients and prospective clients, they are not intended to provide any specific investment advice.  Each situation is different and any general advice provided in the context of these articles may not be suitable for all individuals.  Always consult a professional for advice specific to your situation.

About Objectively Speaking

Tom Batterman, founder of Vigil Trust & Financial Advocacy and Financial Fiduciaries, LLC is in the business of representing the best financial interests of his clients. Having provided objective, fee-only financial management services for over two decades, he specializes in managing the investment and related financial affairs of individuals and mutual insurance companies who do not have the time, interest or expertise to manage such matters on their own. As an objective, unbiased professional who takes on a fiduciary responsibility to his clients, he guides clients to the financial decisions they would make themselves if they had years of training and experience and the time and expertise to fully research and understand all of their options. Founded in 2010 as an outgrowth of Vigil Trust & Financial Advocacy, Financial Fiduciaries, LLC is a financial management solution for individuals and mutual insurance companies who recognize they do not have the time, interest or expertise to properly attend to their financial matters on their own. While there are many financial “advisors”, most of them have investment products to sell and the “advice” they provide is geared toward getting their clients to engage in a purchase. As one of the rare subset of advisors known as “fiduciary advisors”, Financial Fiduciaries does not sell any investment product so its guidance is not compromised by conflicts of interest which plague ordinary advisors. Prior to his employment in the financial industry in financial advocacy and trust positions, he worked at a private law practice in the Wausau area in the areas of estate planning, tax, retirement planning, corporate organizations and real estate. He is a graduate of the University of Wisconsin-Madison and the UW-Madison Law School and has during his career held Series 7, 24 and 65 securities licenses. A longtime resident of the Wausau, Wisconsin Area, Tom is active in the community. He enjoys golf, curling, skiing, fishing, traveling and spending time with his family.
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