Social Security Planning

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“My Social Security” Online Account Access

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Contributed by: James Smiertka James Smiertka

Did you know you can now take advantage of the My Social Security benefits site? When you visit, you simply sign up for an account. It is a free service, and as of May 29, 2015 more than 19 million accounts have been opened.

The Benefits

If you are currently receiving benefits and/or have Medicare, you are able to:

  • Get your benefit verification letter if you need proof of income, Medicare coverage, retirement status, disability, or age
  • Check your benefit & payment information and view your earnings record
  • Change your address and/or phone number
  • Start direct deposit of your benefit or change your direct deposit info
  • Get a replacement Medicare card
  • Get a replacement SSA-1099 or SSA-1042S for taxes

If you do not currently receive benefits, you are able to:

  • Review your Social Security Statement including estimates of your future retirement, disability, and survivor benefits
  • Review your earnings once annually to verify the amounts are correct
  • Review the estimated amounts of social security and Medicare taxes you have paid
  • Receive a benefit verification letter if you need proof that you have never received Social security, Supplemental Security Income (SSI) or Medicare

How to Create an Account

Below is a screenshot of what you can expect to see when you visit the website:

When you select “Create an Account” you will be re-directed to the following page:

Since you are a new user, click on the blue  “Create An Account” and enter your personal information:

On the following page you will confirm some information that is provided, such as your mortgage company, auto loan company, license plate, and current vehicle, etc. The confirmation of this information is used to verify your identity.

Next you will create your username & password as well as choose your password security questions:

Now you are ready to sign in to your My Social Security account. Below you’ll see an example of the information you can access when you sign in (included are the Overview & Estimated Benefits pages):

Keeping Your Information Secure

It is always important to keep your information safe and secure. Here are some important things to keep in mind:

  • Emails about “My Social Security” and other government agencies always come from a “.gov” email address. Use extreme caution if the email you received is not from a “.gov” sender.
  • Links, logos, & pictures will always direct you to an official Social Security website
  • DO NOT respond or click any links when dealing with a phishing scam email message
  •  Look for poor grammar, wording, phrasing, and/or spelling in all email correspondence
  •  Look for outlandish claims that could not possibly be true
    • If a “foreign prince” emails your from overseas offering to share his gold bullion reserves in exchange for you wiring him a few hundred dollars now for safe border passage between war-torn countries, it’s probably not a legit email
    •  If an email includes the name of a business and/or contact information, such as telephone number or website link, you can attempt to verify the legitimacy via a search engine like Google
  • Speak to friends and family members if you are questioning the validity of a strange email
  • DO NOT respond with any of your personal information if you believe the email may be a scam

I hope this information will be useful for signing up and realizing the benefits of a “My Social Security” account, as well as keeping your information safe. If you have any further questions, you can utilize the www.ssa.gov website or contact your local Social Security office directly.

James Smiertka is a Client Service Associate at Center for Financial Planning, Inc.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website's users and/or members.

Don’t Make a Costly Mistake

 If you knew that meeting with a financial planner regularly might help you find opportunities and avoid costly mistakes, would you do it? While that might sound like another financial planner’s pitch to get you in for your annual meeting, it’s not. And I have the story to prove it.

Uncovering additional income

I recently sat down with a same sex couple for a routine financial Annual Review. The federal government has found same sex marriage to be legal for filing a joint tax return and for drawing Social Security marriage benefits. These clients are in their late 50s and are both retired. One was a high-income earner throughout her career. The other fell 10 quarters short of the 40 quarters you are required to pay into FICA taxes in order to receive Social Security benefits.

Going back to work for 10 more quarters just didn’t seem worth it to my client since it only meant $2,000-$3,000 a year in benefits. But what she wasn’t thinking about was that, if she did work 10 more quarters, she would be legally entitled to spousal benefits. Her partner had maxed out the Social Security benefit after paying into the system for many decades. We did some quick math:

So, does working for 10 more quarters to become eligible for half of your spouse’s Social Security amount seem worth it? The answer was easy for them. And they realized, without sitting down for an Annual Review, they could have missed the boat entirely.

Your Own Annual Review

This is a very unique circumstance and your situation may not be similar. But there is no denying that Social Security is complex and it makes sense to pay attention to the rules for qualification and how the strategies apply in different circumstances. Could you do it alone? Think of it like going to the dentist. You might not know you have a cavity … that could turn into an abscess that threatens your life … unless you get a regular cleaning. So stay on top of your financial health, just like you do your dental health. Visit your financial planner regularly, discuss issues, and communicate. You might just uncover unforeseen benefits and it will hopefully be less painful than a trip to the dentist!

Matthew E. Chope, CFP ® is a Partner and Financial Planner at Center for Financial Planning, Inc. Matt has been quoted in various investment professional newspapers and magazines. He is active in the community and his profession and helps local corporations and nonprofits in the areas of strategic planning and money and business management decisions. In 2012 and 2013, Matt was named to the Five Star Wealth Managers list in Detroit Hour magazine.

Five Star Award is based on advisor being credentialed as an investment advisory representative (IAR), a FINRA registered representative, a CPA or a licensed attorney, including education and professional designations, actively employed in the industry for five years, favorable regulatory and complaint history review, fulfillment of firm review based on internal firm standards, accepting new clients, one- and five-year client retention rates, non-institutional discretionary and/or non-discretionary client assets administered, number of client households served.

The material is being provided for information purposes only and is not a complete description, nor is it a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. The information has been obtained from sources considered to be reliable, but Raymond James does not guarantee that the foregoing material is accurate or complete. The example provided is hypothetical in nature and is to be used for illustrative purposes only. C14-038027

How Singles Can Use File and Suspend

 There are certain advanced social security income strategies available for married couples that can help to maximize income in retirement. It’s a different story for single people who have fewer opportunities to use some of these more advanced strategies.  But there’s a strategy called “filing and suspending” that may work for you, no matter your marital status. 

File & Suspend: Not just for married couples

This strategy is sometimes used by married couples because it allows for one partner to defer taking benefits and gain credits on their benefit for doing so. In the meantime, the other partner receives a spousal benefit. But if you’re single, there is no “spousal benefit” so the rationale for utilizing such a strategy is different.  A single person might use this strategy by filing for benefits retroactively.

Retroactive Benefit Payment Limits

Under the “normal” social security rules, those who are full retirement age can only file to receive back payment benefits retroactively for up to 6 months. For example, let’s say George plans to wait until age 70 to collect benefits so he doesn’t go through the process of filing and suspending those benefits. Then, at age 67, George changes his mind and wants to file and suspend. He is only entitled to receive a lump sum payment for the last 6 months of benefits that he could have received.  If George had filed and suspended benefits at his full retirement age and later changed his mind, he would be entitled to receive all of the benefits he would have been entitled to receive going back all the way to the date that he originally filed and suspended.

When File & Suspend Can Pay Off

Now you might be asking, “Why does any of this matter if my game plan is to wait until age 70 to collect benefits?”  Your skepticism is justified because in most cases it will make no difference.  However, in some cases, your health might change from the time you are 66 to 70. Then, it would make a lot of sense to go back to social security and ask for a lump sum payment for benefits you would have received from 66 to 70.  If you filed and suspended, you are entitled to get all of those benefits. If you didn’t file and suspend than you are only entitled to receive 6 months’ worth of back payments.

The rules surrounding social security are vast and very complex.  As with any complicated financial decision, it’s often best to seek the help of a qualified financial professional to help navigate the waters.

Matthew Trujillo, CFP®, is a Certified Financial Planner™ at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

The information contained in this report has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making a n investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. Examples are for illustrative purposes only. C14-028511

Social Security: Delaying vs. Collecting Retirement Benefits

 The wonderful and frustrating Socratic Method I learned in law school taught me that, for most issues, there were two plausible sides or conclusions.  Much to the chagrin of my colleagues (and dare I say my family at times) this perspective can be downright maddening.  So, as I apologize to those that have to deal with me every day! But in many instances, I also believe that it has served clients well.  As much as we’d all like a simple rule or answer at times, many of life’s decisions, and certainly financial decisions, are best contemplated based on the specific facts and circumstances. 

There may not be a greater example than this financial dilemma:

When do I begin receiving Social Security retirement benefits?

The majority of Americans take Social Security benefits at the earliest date possible, age 62, for the mere fact that they require the funds for everyday living expenses.  For those that have the financial flexibility, implementing the maximum social security strategy comes down to your specific circumstances.

Both Sides of the Social Security Coin

Financial Advisor Magazine recently published two articles on social security.  The first, Many Retirees Wish They Had Waited To Take Social Security and the second, Taking Social Security Early Can Make Sense. Your immediate response might be like mine, well wait a minute, which one is it?  Both articles do a fine job representing the pros and cons as I have shared in the past; and ultimately conclude that the “correct” decision is very individualized.

Delaying vs. Collecting at 66

The benefit of waiting past age 62 is that you will receive more each month.  And, if you wait until age 70 you will receive an 8% Delayed Credit each year from age 66 (technically from your full retirement age for people born between 1943 and 1954).  For those with a long life expectancy, waiting can add substantial dollars; but they are not realized until age 80 in most calculations.

However, delaying comes with a risk too.  If you delay and pass away early (and I say any age is considered too early), this will result in a substantial loss at best and a total loss at worst.  Also, is it reasonable to perhaps take funds from your own investments that ultimately pass to your heirs, while you wait to cross over the breakeven point?   

As shared in an earlier blog post of mine, couples have additional variables to consider due to what essentially amounts to joint life expectancy decisions.  

Whether you are single or a couple, getting the Social Security decision correct can be substantial.  I promise to go easy with the Socratic Method … but considering all of the questions and variables of your individual circumstances may lead to better decisions for you and your family.  Give us a call if we can help!

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any information is not a complete summary or statement of all available data necessary for making an investment decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of RJFS or Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. C14-019070

Should anyone under 40 be counting on Social Security?

 Younger professionals often ask, “Should I even bother including social security benefits in my retirement plan projections?”  Unfortunately, it’s hard to give a direct answer.  There is certainly a valid reason for concern and a strong argument to be made for not including social security retirement income in your overall plan if you are under the age of 40.  Let’s dig deeper into social security to look for some possibilities about the future of the program itself.

According to the Simpson Bowles bi-partisan report of 2010, when social security was first enacted back in 1935, the average life expectancy was 64 and the earliest you could collect benefits was 65.  If most people die before they are eligible to collect benefits, then the program is fairly easy to maintain. In today’s America, people are living longer (average life expectancy of 78) and they are eligible to collect benefits at 62 (three years earlier).   Not to mention that in 1950 there were 16 people working for every 1 person collecting whereas today the ratio is 3 people working for every 1 person collecting benefits.  Is it any wonder the social security trust fund is projected to be fully depleted by 2037? 

The Simpson-Bowles report further goes on to explain that unless changes are made soon, by the year 2037 there will only be enough revenue coming in to pay approximately 75% of the benefits owed.  That could mean either everyone gets their benefits reduced or some people don’t get any benefits at all. 

The Simpson-Bowles Report offered solutions that could impact the sustainability of the program:

  1. Increase the Full Retirement Age from 67 to 68 for those born after 1970, age 69 for those born after 1980, and age 70 for those born after 1990.  Also, increase the early eligibility age along with the full retirement age so that those born after 1970 would have a full retirement age of 69 and the earliest they could collect benefits would be 63.  This approach seems like a very reasonable way to address the increasing life expectancy of Americans. As a young professional I’m certainly not thrilled about the idea of having to wait longer to collect benefits, but I would much rather have to wait than to receive no benefits at all.
  2. Get rid of the wage cap on the social security payroll tax. Currently the social security wage tax is 6.2% on earnings up to $117,000.  Lowering the payroll tax to 4% and lifting the cap would theoretically bring in more revenue because you are taxing a lot more dollars at a lower rate.  This approach may be more politically palatable than just simply lifting the cap and keeping the tax rate the same.

  3. Use the chained CPI approach for cost of living adjustments rather than the standard CPI approach that is now in use. For further discussion on this subject please see the following link:  http://www.advisorperspectives.com/dshort/commentaries/Chained-CPI-Overview.php

Certainly there are other ways to fix the system, and hopefully lawmakers can all agree that it’s a useful program and it is worth fixing. So what’s my answer when a young professional comes to me and says, “Matt, should I or should I not include social security retirement benefits in my retirement projections?” I say that there seem to be strong indications that the program will probably be there in some fashion. It’s unlikely that you will be able to collect a full retirement benefit at age 67, and it’s also unlikely that you will be able to collect at age 62.  To be cautious, it may make sense to plan on collecting a reduced benefit at age 70.  If the program is healthy and you are able to collect sooner, then your plan will work out even better.

Matthew Trujillo is a Registered Support Associate at Center for Financial Planning, Inc. Matt currently assists Center planners and clients, and is a contributor to Money Centered.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. Links are being provided for information purposes only. Raymond James is not affiliated with and does not endorse, authorize or sponsor any of the listed websites or their respective sponsors. Raymond James is not responsible for the content of any website or the collection or use of information regarding any website’s users and/or members. C14-010819

Quick Social Security Tips

 There are many ins and outs of Social Security and I want to help you stay on top of them (without boring you with a pile of information). Here are easy explanations of two topics that can help you make the most of your benefits:

Where’s my social security statement?  

Remember when you used to get a statement each year a few months before your birthday from the Social Security Administration (SSA)?  Well if you haven’t seen it in a while that’s because the SSA stopped mailing to most folks back in 2011 (at a savings of $70M). 

The SSA will begin mailing benefit statements every 5 years to those who haven’t signed up for online statements (those already receiving benefits get an annual statement).  The statements will be sent out at age 25, 30, 35, 40, 45, 55 and 60.  If you haven’t checked out the SSA web site, I suggest doing so: www.ssa.gov.  You may receive your statement, project future benefit amounts, as well as learn more about one of the nation’s largest expenditures.

Widowed? Research suggest that you might not be getting your fair share

According to a recent report from the Social Security Administration Office of the Inspector General, as many as one third of spouses age 70 and older are not getting the maximum social security benefit. The issue arises when a spouse initially receives “widow” benefits as early as age 60 (benefits based on your spouse’s earnings) and then later is eligible based on their own earnings record for a higher amount. As an example, Jan’s husband Paul passed away and Jan decided to begin receiving a widow’s benefit at age 60.  At age 62-70 Jan may switch to benefits based on her earnings record if they are higher.  Jan will need to be proactive as the SSA will not inform Jan if she is eligible for a higher amount.  When in doubt – call the SSA and give them your social security number and the social security number of your spouse to learn about all of your options.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing material is accurate or complete. C14-011440

Answering Tough Questions on Social Security

 With a little humor and a lot of facts, our Tim Wyman answers questions about a topic that can easily confuse. There are so many facets of Social Security that is hard for anyone to stay on top of it all, but everyone wants to make the most of their retirement benefits.

This Q & A session holds answers to some of the questions we hear the most.

Tim you seem to have a particular interest in Social Security retirement benefits?

I am not sure if it’s the graying of America or graying myself (really balding in my case) but the issue is important to many of our clients and prospective clients, so I have spent considerable time learning the ins and outs of social security retirement benefits.

Are there general rules that people can use to determine how to maximize social security benefits? 

I wish there were.  Right now there are over 2500 rules in the Social Security Administration handbook.  The challenge, and opportunity, is to apply the rules to each situation.  For some, beginning to receive benefits as early as possible might be best.  For others, especially couples, having one spouse wait until age 70 in order to receive “Delayed Retirement Credits” might be best. I recently blogged about how couples can come up with the best strategy (click here).

Maybe we are getting ahead of ourselves – will Social Security be there for future generations?

Twenty years ago many clients wanted their plans to be reviewed assuming social security would not be available.  As people get closer to retirement this has changed. While there may well be changes to the social security system in its current form, my research suggests that benefits will remain intact for most.  For younger workers, perhaps under 50, it probably makes sense to assume some sort of reduction in benefits when planning for retirement.

Are social security retirement benefits meaningful? Why not just assume they won’t be there.

Social security benefits for many of our clients may be less important in their financial independence, but they are still significant.  It is not uncommon for social security benefits to have a present value of $800k-$1M for some of our clients – I would deem that very meaningful.

When should people start receiving benefits?

That is a very individualized answer.  For some, most Americans frankly, starting as soon as possible (age 62) is necessary to meet their living expenses.  When working with clients in determining a strategy I will try to balance factors such as their income needs, health status, life expectancy, whether they plan to work past age 62, income taxes, and their marital status.  I like to think of a large funnel – we put in all of the factors specific to our client and attempt to determine the best strategy for them. Unfortunately, general rules just don’t provide the best solution.

Many articles have been written on how to maximize benefits – what’s your take on them?

There have been many fine articles written for consumers, as well as research papers for professionals, trying to determine the “best” claiming strategy.  These articles are wonderful in increasing one’s knowledge on the topic.  However, what is right for one person or couple cannot be gleaned from an article.  Determining the ideal solution takes conversation and scenario planning with your particular factors in mind.  It is what we do for clients and has really seemed to provide some clarity in their retirement planning.

For more answers to your social security questions, contact Tim at the Center for Financial Planning.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

Any opinions are those of Center for Financial Planning, Inc. and not necessarily those of Raymond James. C14-004615

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Ways to Maximize Social Security Benefits

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 Recently I had the privilege of presenting at the Michigan Association of CPA’s continuing education conference on the topic of Maximizing Social Security benefits.  Social security is an important source of income for most of the estimated 58 million people who receive benefits.  Over my 22 years as a practitioner, I have tried to counsel clients to be sure to coordinate social security retirement benefits with their overall retirement plan.  As pensions (not just the City of Detroit) continue to become more obsolete, social security remains one of the few, if not only, guaranteed income sources for future retirees.

Following Ida Mae Fuller’s Lead

Before getting to how to maximize social security retirement benefits – how about a little fun social security history?  Do you know Ida Mae Fuller?  She is the first reported person to receive social security retirement benefits.  Apparently Ida went into the SS office after contributing a total of $24.75 over three years in payroll taxes and told the staff that she was retiring and didn’t expect to receive anything – but thought she might as well check. She ended up collecting $22.54/month and lived to age 100 – not a bad return on her contributions!

When to Begin Collecting Benefits

A traditional breakeven analysis works pretty well for single folks.  One of the best research articles that I have come across was in the Journal for Financial Planning and written by Doug Lemons.  Mr. Lemons outlined three main variables in the breakeven analysis: inflation/cost of living, income taxes, and time value of money. Mr. Lemons’ research addressed multiple variations and combinations.  The general rule based on his research is:

  • The breakeven between taking at age 62 and 66 (assume full retirement age) is roughly age 78.  Meaning, you need to live past age 78 to be better off by waiting until age 66.
  • The breakeven between taking at age 66 and 70 is roughly age 83.  Meaning, you need to live past age 83 to be better off. 

Social Security Analysis for Couples

The breakeven analysis breaks down a bit for couples (two life expectancies vs one). I have written about spousal benefits in the past.  In this post I’d like to provide two strategies for couples to consider.

File & Suspend Strategy

June Cleaver:  As you may know, June Cleaver of the “Leave it to Beaver” show was the classic stay-at-home mom.  Her husband Ward, who sometimes was known to be a “bit too hard” on their son the Beaver, was the sole income earner. If June and Ward were close to retirement today, their respective social security benefits at full retirement age might be $2,000/month for Ward and $0 for June.  How can they maximize benefits?  At full retirement age (assume 66) Ward files for social security retirement benefits but then immediately suspends.  This allows June to begin receiving a spousal benefit (assuming she is at full retirement age) which is $1,000/month or 50% of Ward’s benefit. Then, when Ward turns age 70, Ward may elect to begin receiving his own benefit ($2,640 in this example) that has increased 8% per year from age 66-70 thanks to “Delayed Retirement Credits”. Assuming average life expectancy, this combination will provide June and Ward the maximum benefit.  What if Ward passes away at age 75? June will receive the higher of her benefit or Ward’s as a survivorship benefit - $2,640 in this example.

Claim Now, Claim More Later

Elyse Keaton: Elyse Keaton of “Family Ties” was played by Meredith Baxter (and mother of Michael J. Fox in the show).  Elyse, unlike June Cleaver, had income of her own as an architect. Elyse and her husband Steven Keaton had similar earnings. If Elyse and Steven were close to retirement today, both of their social security benefits at full retirement age might be $2,000/month. Rather than “filing & suspending” like June and Ward, the Keatons might consider another strategy to maximize their total benefits.  At full retirement age Elyse should consider taking her own benefit or $2,000/month.  Steven, at full retirement age, may choose to restrict his benefit to a spousal benefit only (50% of Elyse’s benefit) or $1,000/month.  This allows Steven to collect some benefits now while allowing his own benefit to grow at 8% until age 70.  At age 70, Steven may elect to begin receiving benefits based on his own earnings – or $2,640/month.  Note that the survivor benefit for each of them now becomes $2,640.  The election to “restrict” to a spousal benefit can only be done at full retirement age or later. 

So, are you more like June or Elyse?  If your situation is more like June’s then consider the “File & Suspend” strategy.  If your circumstances are more like Elyse’s then consider the “Claim Now, Claim More Later” strategy. Do you have a social security question? Let us know – we love to research and help you maximize the benefits. 

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information has been obtained from sources considered to be reliable, but we do not guarantee that the foregoing information is accurate or complete. Any information is not a complete summary or statement of al available data necessary for making a decision and does not constitute a recommendation. Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of Raymond James. The examples provided are for illustrative purposes only. Every individual’s situation is unique and you should consult with the appropriate professional regarding your individual situation.  Every individual’s situation is unique and you should consult with the appropriate professional regarding your individual situation. Guarantees are based on the paying ability of the issuer. #C14-000038

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The Ideal Age to Start Social Security

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 I recently had an opportunity to travel to Chicago to meet with a group of retired airline pilots.  We had a great conversation on areas such as estate planning, investment planning and income tax planning given changes that occurred in January 2013.  However, it was Social Security that garnered the most interest and questions for this group of retirees between the ages of 60 and 70.  Specifically, the question at hand was, “When is the ideal time to start receiving social security retirement benefits?” 

If you think that the IRS Code is complex, then Social Security claiming rules are a close second.  Unfortunately there is a lot of confusion and misinformation.  Moreover, the stakes are quite high.  Perhaps at age 40 social security benefits are a distant thought, but for those aged 60+ the issue is quite ripe. 

Deciding When to Claim

As with most financial planning decisions, general rules get you only so far.  The key is to structure your decision, when to claim in this case, based on your individual goals and circumstances. The reason that most Americans choose to start social security retirement benefits as early as possible is because frankly they need the money now.  However, for those with flexibility in timing, there are strategies that can be employed to maximize benefits, especially for married couples. 

Social Security Simple Math

All kidding aside, if you know the day you will die then the decision is straightforward and is a “simple” math equation.  Barring certainty on that “day” however, certain assumptions must be made.  You see, social security benefits are designed to be actuarially fair or equal. Meaning, if you collect a reduced benefit starting early at age 62 you will have smaller payments lasting for a longer period of time, but if you elect to postpone receiving benefits you will collect a larger amount for a shorter period of time. If you live to normal life expectancy the math is the same.

There are a variety of software programs designed to assist in making the most-educated decision about the optimal time to claim social security retirement benefits.  Please feel free to contact us if you would like assistance in making this important decision.

Timothy Wyman, CFP®, JD is the Managing Partner and Financial Planner at Center for Financial Planning, Inc. and is a frequent contributor to national media including appearances on Good Morning America Weekend Edition and WDIV Channel 4 News and published articles including Forbes and The Wall Street Journal. A leader in his profession, Tim served on the National Board of Directors for the 28,000 member Financial Planning Association™ (FPA®), trained and mentored hundreds of CFP® practitioners and is a frequent speaker to organizations and businesses on various financial planning topics.

The information contained in this report does not purport to be a complete description of the subjects referred to in this material.  Any information is not a complete summary or statement of all available data necessary for making a decision and does not constitute a recommendation.  Any opinions are those of Center for Financial Planning, Inc., and not necessarily those of RJFS or Raymond James.

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