Social Security



Social Security is often regarded as an incidental afterthought for some.


While for others it is a lifeline of financial security in retirement.


For approximately 2/3 of retiree’s, Social Security is more than half of their income. To maximize the benefit, Care should be used when applying for benefits.  


  Social Security was never intended to be a primary income in retirement.


Social Security will pay about 60% of your working income.  Before applying for the benefit, compare your expenses with only 60% of your paycheck.


If you do not set aside other funds in a sufficient amount,  you may need to continue working through your retirement.




Social Security planning


To maximize the benefits, we look at several factors.   Your health and family history for starters.  For some, it may be advisable to begin benefits at age 62, while others, it’s best to start at age 70.   Many will say they will start at age 62 because they think it will break even.   Not always true.  The cost of this could be many thousands of dollars over your lifetime.  There are several options as to how and when to apply for benefits.



The Break Even point often referred to is about the age 82.



Knowing that. If you know you will not live beyond the age of 82, go ahead and take it at age 62.


HOWEVER-  If you are married, you need to consider the benefit that you will receive at age 62 or 70 or somewhere in between.  The reason for this is so that the surviving spouse will receive the higher of the 2 incomes after your passing.  You should look at both incomes for proper planning.



The earlier you start your benefits –  the greater the reduction in the benefits.


Follow this link for more information.

Read more about Social Security discounting.


Social Security will tell you what your future benefits may be.  Use that information to consider when to start your benefits.  You may need to work longer to increase the monthly benefit.


 Having to go back to work in a store, at an older age, is not recommended.  Work longer now while you have a good job and are in better health.  


A Project for you.  Go to the big box store or grocery store and LOOK at the people.  Are they there because they want something to do?  This happens a lot when someone just wants to keep active.  Others may have no choice about being there.



Social Security is a Lifetime Annuity.  Once started, it continues for your lifetime.  


We can no longer suspend it as we were able to some time.



retirement income, socoail Security, retire, pension


In Financial Planning we use a term called “ Longevity Risk “.


Simply put, this means you can outlive your assets.   Once you start receiving benefits, you have set the level of the benefit for life.  


Your benefits will last your lifetime, but by starting too early you will lose due to inflation. You will receive a COLA (Cost Of Living Adjustment) that will help keep up with inflation.  If longevity is in the family, starting your benefits early will limit them forever.





Social Security is a sizable amount for your retirement.


You may only see the monthly amount, but over all it is large.


How valuable is the payment received?   We by force of habit think of having as much money  saved as possible for retirement.  Fidelity has gauged the Social Security benefits times (X) 25 to render an approximate value.


An example of 1200 X 12 mo.  X 25 = $360,000 nest egg.    $2,000 X 12 mo. X 25 = $600,000.   Deferring does have its benefits.


 But the increase, by waiting, on $1200 compared to $2000 is a major difference over a lifetime.  


As an Example:   Typically the husband dies before the wife.  If the husband and wife both start at age 62 the amount is set.  Time passes and the husband, who normally receives a higher amount, has limited the spouse to receive a lower amount, compared to what could have been available had the husband waited.  This is but one scenario to be considered when applying for benefits.  We look for other sources of income to make up the interim difference There are many other considerations.


Read more about Social Security discounting.


The Social Security’s web site has many calculators that you can use to estimate different situations.

Please explore the SOCIAL SECURITY site.