Maximize Your Social Security Benefits
Many of our clients have told us that the greatest fear they face today is the fear of not having enough money to maintain their lifestyle throughout retirement. Even in these tough times and volatile market, we have helped our clients take a comprehensive approach to financial planning and offer the service of helping them maximize their social security income. Here are a few things to consider when maximizing your benefits:
UNDERSTAND THE REAL VALUE OF SOCIAL SECURITY
For most Americans, Social Security will not provide enough income during retirement. However, on average, Social Security accounts for about 40% of income in retirement.ⁱ This staggering number should not be ignored. Many individuals will be receiving benefits for 25, 30, possibly even 40 years. Social Security provides valuable protection against this “longevity risk”.
DON’T RUSH TO COLLECT AND THEN REGRET
You will have the option to collect Social Security between the ages of 62 and 70. Most retirees tend to claim their benefits early and overlook that, once reduction penalties, foregone Delayed Retirement Credits and COLAs are factored in, they could have potentially doubled their initial payments if only they waited until age 70. We focus around the “optimal retirement age”; the age at which you could receive more income from starting Social Security benefits earlier versus starting them later.
TAKE ADVANTAGE OF YOUR MARRIED COUPLE BENEFITS
As a married couple, you are eligible for many types of retirement benefits and it can get confusing at times. At one time or another, you may be receiving a spousal benefit, a worker benefit, or a survivor benefit. There are ways of optimizing benefits by developing a claiming strategy for when these benefits become available.
BEWARE OF THE TAXMAN
The contributions you have made to your 401(k)s and other types of defined contribution plans will eventually have to be withdrawn – and taxed. Not only will these withdrawals be subject to tax, but they’ll likely generate higher incomes which leads to higher taxation of Social Security benefits. Most people are not aware, but most of these “tax bombs” can be avoided.
ⁱ Employee Benefit Research Institute, “EBRI Notes,” June 2010, Volume 31, Number 6.
Investment advisory services offered through Horter Investment Management, LLC, a SEC-Registered Investment Adviser. Horter Investment Management does not provide legal or tax advice. Investment Adviser Representatives of Horter Investment Management may only conduct business with residents of the states and jurisdictions in which they are properly registered. Insurance and annuity products are sold separately through TWP Financial. Securities transactions for Horter Investment Management clients are placed through Trust Company of America, TD Ameritrade, Jefferson National Life Insurance Company, Security Benefit Life Insurance Company and ED&F Man Capital Markets.