Social Security

By: Risk Free retirement Planners  04/23/2015

Some believe that Social Security may go the way of the dinosaur before long. But for now, it is one of the most important sources of retirement income for your clients. With 10,000 Baby Boomers turning 62 every day,¹ you may get more and more questions about Social Security. "When should I apply for Social Security Benefits?" is one of the biggest questions you may hear. For many middle income married couples, Social Security benefits comprise 20% - 50% of their retirement income with lifetime benefits reaching upwards of $500,000². Social Security is adjusted annually for inflation; benefits can be taxed up to 85%³; and it is backed by the government and guaranteed for life. Understanding the importance that Social Security holds for your clients, it makes sense to maximize this vital asset. By maximizing (or optimizing) Social Security benefits you can save tens or even hundreds of thousands of dollars over the span of one's retirement. The following is a list of core concepts to reference in your planning. Optimization Overview Delay: The longer you wait to receive Social Security, the bigger your benefit - up to age 70.⁴ Spousal strategies: Married couples can tag-team on each-others' benefits. One spouse can delay their benefit to allow it to grow and claim "spousal" benefits, which are half of the monthly benefit that the other spouse receives. Once the delayed benefits reach their maximum the spouses can switch. • For example, say a 59 year old wife and 61 year old husband use this method. She starts benefits at 64 while he claims spousal benefits until 70, and then starts his own benefits. Assuming they both have average life expectancies, of 82 for him and 86⁵ for her, they will have received roughly $76,000 more than if they had both started claiming benefits at 62.

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