Before You Take Social Security…Do These 3 Things

by Social Security

When Should I Take Social Security…62? 67? 70?

Before you make your irrevocable Social Security filing decision you should do these 3 things:

  1. Read our Social Security Guide
  2. Request a Social Security timing assessment
  3. Use our “simple” Social Security timing quiz to get a sense of your timing. Remember however, as with any simple calculator, this quiz provides a direction to head in, but you’ll want a full assessment (coupled with other retirement variables in the assessment) to get an exact determination of this valuable benefit.

In our guide, you’ll learn:

  • Social security basics
  • Strategies for maximizing your benefit
  • Why taking Social Security at 62 may not be best option
  • How to limit taxes on your benefit
  • Strategies to maximize spousal benefits for married couples
  • The role of Social Security in a guaranteed income plan

Will Social Security Be Around When I’m Ready to Retire?

Social Security has had it’s share of changes over the years causing pause to those of us preparing for retirement. Up to 33% of your retirement income will come from Social Security so it’s a big concern when thinking about the future of this valuable benefit.

Social Security History

Social Security was started in 1935 as a means to provide an income benefit to older Americans who had little to no means of support. The country needed a social program to help these people and the economy.

Since this time, many changes have occurred giving rise to our collective concerns.

  1. The number of workers paying into Social Security (which funds the current benefit payments), has fallen from over 8 workers for every retiree in 1955, to 2.8 workers in 2015. That ratio is expected to fall to 2.3 by 2030. (1)
  2. Social Security morphed into an income program to include disabled workers and surviving family members. These added obligations (above and beyond contributions made by working Americans) were not matched with the required payroll deductions to financially support them.
  3. People are living longer…a lot longer. As can be expected, medical advancements and a consciousness to live healthier are leading to longer retirement spans, putting even greater strain on the system.

Since 2010, Social Security tax and other non-interest income haven’t fully funded the program’s cost. According to the Social Security Trustees 2016 annual report, this pattern is expected to continue for the next 75 years; the report projects that the trust fund may be exhausted by 2034, absent any changes. Should this happen, it’s estimated that current deductions may only be able to pay about 75% of promised income benefits. (2)

The crisis is real folks, however, history has shown us that the system will have some type of reform by our government officials. Under consideration are a number of ways to bring stability to the system, and to guarantee future benefits to all. These include:

  • Raising the Retirement Age: This has been done in the past to accomplish similar goals, and would save money by paying benefits to future recipients at a later age.
  • Increasing Payroll Taxes: An increase in payroll taxes, depending on the size, could add years of life to the fund.
  • Modifying Inflation Adjustments: Rather than raise benefits in line with the Consumer Price Index (CPI), policymakers might elect to tie future benefit increases to the “chained CPI,” which assumes that individuals move to cheaper alternatives in the face of rising costs. Using the “chained CPI” may make cost of living adjustments less expensive.
  • Taxing Benefits of Higher Earners: By taxing Social Security income for retirees in higher tax brackets, the tax revenue could be used to lengthen the life of the trust fund.

It’s clear, our new Trump administration will need to address Social Security reform and make some tough choices. However, history has shown us that our government does act on such matters when absolutely necessary. It’s now just a matter of not “if”, but when and how will the chances occur.

Claim a copy of our Social Security Guide

Check your Social Security Timing

Request a Complete Social Security Assessment

 

Should I retire now at age 62 and collect Social Security benefits, or should I wait until full retirement age?

by Social Security

There’s no right time to begin collecting Social Security benefits, but the age at which you begin receiving benefits will affect how much retirement income you have, so you should weigh the consequences carefully.

Keep in mind that if you collect Social Security before your full retirement age, your benefit will be permanently reduced. Depending on the year you were born, you’ll receive between 25 and 30 percent less per month if you collect benefits at age 62 than if you wait until full retirement age to begin collecting benefits. However, this doesn’t necessarily mean that collecting benefits at age 62 is unwise. In fact, unless you live to an especially old age, you may actually end up with more money ifyou start collecting Social Security benefits at age 62     than if you wait until full retirement age, because you’ll receive more benefit checks.

However, there are also good reasons to wait until full retirement age (or beyond)  to start collecting benefits.  For example, if you work full-time past age 62, you’ll have the opportunity to increase your  eventual retirement benefit, particularly if you are in your peak earnings     years, because your benefit will be figured using your 35 highest earnings years. Additionally, if you’ll barely scrape by after you retire, you may want to receive as much as possible from Social Security each month.   If you can wait past full retirement age to begin collecting benefits, you will receive delayed retirement credits (up until age 70) that will permanently increase your benefit.

Other things to consider include whether other people will be eligible to receive benefits based on your work record, your eligibility for     Medicare, your estimated life expectancy, and taxes. The Social Security Administration (SSA) has several online benefit estimators available at www.ssa.gov that can help you make an informed decision, and you can sign up at the SSA website for a my Social Security account so that you can view your online Social Security Statement. Your statement contains a detailed record of your earnings, as well as estimates of retirement, survivor’s, and disability benefits. It also includes other information about Social Security that may help you plan for retirement. If you’re not  registered for an online account and are not yet receiving benefits, you’ll receive a statement in the mail every five years, from age 25 to age 60, and then annually thereafter. You can also talk to an SSA representative by calling (800) 772-1213 if you have questions. You can read more resources on Social Security and  request a Social Security Optimizer assessment from us at: https://herretirement.com/knowledge-center/social-security/

10 Secrets to Maximize Your Social Security Benefits Under New Law!

by BlogSocial Security
“The budget bill signed into law in early November killed several popular Social Security claiming tactics. This budget bill shut down the popular ‘file and suspend’ Social Security benefit claiming strategy. There is a phase-in or grandfathered period between now and six months after the bill is enacted (April 29, 2016) where file and suspend is still in effect – which means a good chunk of boomers (those that will turn 66 by this April) need to act quickly.”