Claiming social security benefits is more than a rite of passage for the retiree. It is actually one step in an overall strategy, that if not calculated into the entire retirement resource strategy, you may be leaving money on the table.
According to the Social Security Administration, Social Security benefits account for at least half of income for 50% of married couples (married couples should coordinate their claiming strategy) and 71% of unmarried individuals. For 23 percent of married couples and 43 percent of unmarried individuals, those benefits represent 90 percent or more of income.
It’s important to factor this stream of income along with other income “buckets” that you may have in place. Working with your financial advisor is beneficial. It may be that social security is in fact one of the last spicket that you turn on as an income source in retirement in order to map out your best your most optimal claiming strategy.
The Social Security Administration would previously mail out statements however that is no longer the case. You may obtain a statement by visiting www.ssa.gov.
They say that timing is everything and nothing could be more accurate when it comes to the necessary steps for claiming your social security benefit. The Social Security Administration establishes a guideline that suggests that seniors not rely on Social Security benefits to replace more than 40% of their working wages come retirement, but in many instances, we are discovering that seniors and pre-retirees are paying little heed to this advice.
There’s an acronym worth memorizing when the subject of Social Security arises. It is Full Retirement Age or FRA. Your FRA is determined by the year in which you were born and when you are able to receive 100% of your Social Security benefit. For those born between 1943 and 1954, your FRA is 66 years of age. Each additional year one waits to draw on social security between the age of 62 and 70 translates to roughly 8% growth in monthly benefits. Note the chart below.
THE SOCIAL SECURITY RETIREMENT BENEFIT SCHEDULE FOR PEOPLE BORN BETWEEN 1943 AND 1954. CHART BY AUTHOR. DATA SOURCE: SOCIAL SECURITY ADMINISTRATION.
This important component to your retirement planning needs careful consideration. Please feel free to contact us with any questions you may have. We look forward to continuing the discussion with you.
