We get this question asked by our clients quite often,
Should I just wait to get Social Security or start early at 62?
As with all questions that shower us regarding Social Security benefits, you first need to know that no answer can be concrete for the masses. Everyone is different! One of the most amazing attributes of my profession, is the opportunity to meet and serve so many individuals and families regarding their personal financial well-being. Through listening to the people I serve, it brings to life how truly different everyone can be in reference to: spiritual belief, health, family dynamic, lifestyle, income and assets, goals, risk tolerance and many, many more. So in other words, “it depends” is the right answer. I like to put it this way… If you have planned financially for retirement, then you have put yourself in a position to have options. Those options that are available to you and your family, we can define.
With that said, the great underlying point with Social Security is that we do know the FACTS! For example, you can file for benefits as early as age 62 when you are first eligible, but of course that will come at a cost. You may also choose to defer beyond your FRA (Full Retirement Age) to collect a deferred credit up until the age of 70. So without giving you an exact response to the question, allow me to provide questions that you should consider to help facilitate this decision.
How is your health and well being playing a role in your life?
I always ask this question when hosting an educational event, “What area of your retirement do you feel presents the most risk to your financial well-being? Market Risk, Taxes, Healthcare?”, and the natural response is 90% or more “Healthcare”. The reality is that this is a very serious consideration if you’re thinking about retirement. Social Security is an income stream like a pension plan, but is not a sum of money that you can take as a whole. So the benefit of Social Security is not an actual asset to your estate until you begin receiving the income. So the truth is, Life Expectancy will by itself actually define when would have been the best time for you to file for benefits. Unfortunately, we all know that there is no guarantee of tomorrow, but I would still ask you to think about life expectancy and ask yourself some very foundational questions.
1.) How am I doing physically today?
2.) Considering my close relatives, what is the life expectancy of my blood line?
3.) If I pass, will my spouse continue the benefit I choose? If so, allow them to answer question 1 and 2.
4.) Lastly, If I am healthy, what do the statistics reference regarding life expectancy?
You see, the answer is still left uncertain, but we can still construct a foundation to help make the BEST decision with the facts we know of today. Real planning, is then the ability to take those decision and adapt to the unknown future called “LIFE”.
Do you currently live a very active and engaged lifestyle?
Your lifestyle that you currently live should also be taken into account. If you are active, healthy and socially engaged life, then research shows you may actually put more years in your tank. Spending these years of your life in the best and most enjoyable way with the people you love is what it’s all about; however, this means you also will have to have enough resources to sustain the lifestyle you want to live in. Many people ask a general questions such as, “How much money do I need to retire?”, but I would also ask you to consider how much money you will need to STAY retired?
Think about it, you leave your home 5 days a week through your working years to trade off time and skill for income. When you retire, you leave your home 7 days a week and the majority of what you do will take income. Having a realistic expectation of what lifestyle you can afford is impeccable before retirement. Why, maybe having a certain lifestyle or even sustaining the one you have will naturally push you to work a few years longer an as a result defer Social Security benefits. After all, it lies with what is most important to you.
Do you need the income?
Maybe a better way of asking this question is, “do you have other resources”? The truth is, other resources simply give you the ability to plan and strategize based off what is best for you. Otherwise, if you are ready to retire and your only avenue to accomplishing this goal is to file for Social Security benefits, what else could you do? For now, lets assume that you don’t necessarily have to take the benefits today, but are considering it. The questions that I would ask you while meeting together are:
1) Have your reached your FRA?
2) Are you currently working?
3) If so, how much do you earn?
4) Are you single, married, divorced, widowed, or divorced-widowed?
5) If you’re not single, how does your benefit look based off your earnings record relative to the other benefit you might be eligible for?
If you can’t see it already, there a lot of hidden elements to retirement that could cost you greatly by making a mistake. Don’t ever lose focus that this benefit we are discussing will most likely provide anywhere between 30% – 60% of the average households income in retirement. This is a huge piece to the puzzle and should be considered greatly. As a result of our team hosting educational workshops on the topic of Social Security, I could write a book of the individuals we have run across whom are now receiving benefits in retirement that they never knew they where eligible for. Unfortunately, no one was going to tell them, including Social Security.
The best way to approach this decision is to talk to a wholistic financial planner that specialized in Retirement Planning. You’re looking for someone that understands the FACTS of Social Security and has a strong interest in listening and customizing a plan just for you. In essence, you need a team that holds true to the Fiduciary Standard. If you’re unsure if the advisor you currently work with is fit for all the important areas of Retirement, or maybe you don’t even have a financial team currently, I want you to feel completely comfortable with reaching out to us. During our free consultation, I will also give you a detailed social security report customized for you! Contact us here.
If you’re one of the kinds of people that can wait, This just means that you’ll have more time to contribute and save your money. At AMG-Inc, we never let that time get off of our clocks. For us, that’s a big plus.
Looking at social security should be a very important matter, especially with your partner/spouse. Legacy and income planning can go a long way towards reaching your goals and objectives. The best way to approach this situation is to talk to a financial planner or company that understands you on a personal level and has the track record of helping clients in similar situations and circumstances. This way, you can make a more informed opinion and not let these worries follow you into the golden years. For a complimentary social security report, please feel free to contact us here.