Social Security: Don’t Leave Money on the Table

By: Marc C. Shaffer

Have you considered how social security fits into your retirement plan? Social Security is an important factor when determining the amount of income you will have in retirement, but it is also a factor that causes confusion for many. With so many questions surrounding Social Security, such as when to start receiving benefits, the ins and outs of filing and suspending, survivor benefits and how to supplement your Social Security income, making the decision that works best for you can be a challenge. Working with an advisor who can walk you through the process may help you maximize your Social Security benefits. Without help, you may be leaving money on the table.

Improper timing of starting to receive benefits or unknowingly accepting less benefits than you are entitled can cost Americans tens of thousands of dollars over their lifetime. Consider these factors that may affect your benefits before making a decision:

When to Receive Benefits – Knowing how long you can wait to start receiving your benefits is very valuable. According to the 2013 Annual Statistical Supplement from the Social Security Administration, 37.2 percent of Americans start taking benefits as soon as they are eligible. But, could you afford to wait a few more years until you reach the full age of retirement? Doing so should increase your monthly benefit for life. If you are still working or have income from other sources that covers your financial needs for those years, you may want to hold off beginning to collect. However, if delaying would force you to take taxable distributions from your Individual Retirement Account, it may not be the best solution.

Special Situations with Death and Divorce – There are special situations that can affect your Social Security benefits, such as being a widow/er or an unmarried divorcee that was married 10 years or longer. In these situations, you should consider if the benefits to which you are entitled are less than those you would receive if you switched to your deceased spouse or former spouse’s work benefits.

Life Expectancy – Considering your life expectancy can help you determine if you will have an appropriate amount to live on until death. If you are not expected to live well into your 80s or 90s, it could be to your benefit to start your benefits early. However, if you are in good health and may live several decades in retirement, you should consider if your additional retirement savings will last until your death, and if not, consider if a lower Social Security benefit would be able to sustain you once your other assets are depleted.

There is not one general rule for maximizing your Social Security benefits that applies to all situations. In order to maximize benefits for your personal situation, having someone who can help walk you through the possibilities may help save you thousands of dollars in the long run. If you are interested in learning more about Social Security, email me at [email protected] to request our free resource packet: Maximizing Your Social Security Benefits.

Originally published in Johnson County Lifestyle

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The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on December 1, 2014 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.