Start Early and Get to Know the Social Security Program
I have been advising people for years now on the various ideas they have when it comes to claiming Social Security benefits. Social Security is a program that is loaded with rules. But as you get closer to retirement, it is important that you familiarize yourself with the way Social Security works and begin to build out a comprehensive strategy. If you do not, you could end up making a big mistake!
Lessons Learned
Everyone’s situation is different – seek advice from a qualified individual. Although your friends and neighbors may have been through the Social Security filing/claiming process, they are most likely not aware of all the variables in your situation. You only get one shot at making the right decision.
Do not make your decision based on emotion. Social Security is not going broke. Do not react to everything you read or watch.
Don’t assume a Social Security customer representative will help you in analyzing and making your decision. They are told by their operating manual to give enough information to help you make a decision, but not to give you advice or consider your entire financial situation.
If analyzed properly, you should have anywhere from 4 to 8 strategies from which to choose.
Additional Considerations
For a married couple, lifetime benefits usually represent a lifetime cash flow stream of $1,500,000- $1,750,000 – not a small amount.
The total dollar difference between the highest and the lowest strategy could be as much as $250,000.
While planning your strategy, you need to look at your joint life expectancies as opposed to each person in a silo.
The goal is to maximize the higher earner benefit, coordinate the benefits between the spouses, and maximize the survivor benefit.
It’s More Than Taking the Highest Amount
Making your decision on which strategy best fits your situation involves more than taking the highest amount. Although the difference in strategies may produce a gap of $250,000 over your lifetime, it may not be the best choice.
Remember, take the wrong benefit at the wrong time, it’s always smaller and forever.
Other factors that come into the decision-making process that should be considered are:
Are you or your spouse still working?
How long do you plan on working?
How is your health and your spouse’s health?
Do you need the cash flow now, or can you wait?
Do you have children under 19 or are disabled?
Do you plan to live to 80?
Social Security benefits make up one piece of your overall retirement financial plan. It may be a large piece or a small piece, but regardless, your goal should be to maximize your Social Security benefits and integrate that income stream into your overall retirement plan.
I’ve always said, take the wrong benefit at the wrong time, it’s always smaller and forever. Do your homework and give yourself the peace of mind that you have made the right claiming decision.