The financial decisions you make at any age will have a long-term impact on the rest of your life. And as you age, it becomes more and more important to ensure the stability of your financial future. As you, or a loved one, looks to retirement and the best ways to maximize social security, there are some key things to keep in mind to help set you up for a positive outcome. To help provide industry expertise, we turned to our friend Joe Henriques at Conte Wealth Advisors for advice on social security benefits as you move into your golden years.
Understand your options and apply at the optimal time.
Everyone’s situation is unique. Some might want to claim social security at full retirement age, others prefer to delay, and some might start taking the benefit early. It is important to know how each situation will impact the benefit over your lifetime. Remember, social security is a benefit you cannot outlive.
Here’s how several scenarios may playout.
- Claiming your benefit at full retirement age will provide you a full, unreduced benefit.
- Applying for social security beyond full retirement age allows you to earn delayed credit of 8% each year you delay up to age 70 years. If your full retirement age is 67 years delaying until age 69 years the benefit is at 116%.
- Applying early has the reverse effect; your full retirement benefit will be reduced based on the age you are when claiming the benefit. If your full retirement age is 67 years. and you took the reduced benefit at age 62 years, you will receive 70% of your benefit, a 30% reduction for life.
Now that you have a better understanding as to how the timing of when you begin receiving your social security benefits will impact you over the course of your life, start planning now. Begin by giving your finances a full review. Consider Social Security in the context of your other retirement resources, including pensions, IRAs, and 401(k)s, the required minimum distributions you will be needing to take at age 72, your overall investment portfolio, and your plans for working in retirement. All of these resources should be coordinated to give you the income you need for the rest of your life.
Think through each scenario and have options A, B, and C in place. Life can through curveballs, so maybe what was once preferred as option A now needs to move to option B for whatever variety of reasons. Knowing your options and having a plan arms you with knowledge.
Seek trusted advice.
And most importantly, please do not be afraid to ask for help! Retirement planning is easy when it is a matter of stashing part of your salary into a 401(k) or IRA. But when the time comes for you to convert your nest egg into an income stream, you want to make sure it does not run out. Social Security may be the bedrock of your retirement income plan, but it must be coordinated with your other resources to give you the stability and security you deserve.