Retirement planning encompasses many important components, including Social Security benefits and how to optimize for them. According to Bankrate.com, there are 567 different ways you can file for Social Security benefits!
At Decker Retirement Planning, Social Security benefits are incorporated as part of the work we do to create your overall custom retirement plan. We help you maximize your monthly benefit amount, adding in other sources of income such as pensions or real estate rentals, and creating a distribution plan for your retirement investments to help ensure that you never run out of money based on your budget. We know running out of money in retirement is people’s biggest fear, that’s why we do the math and design your retirement plan up to age 100.
As a math-based fiduciary retirement planning firm, what do we leave out? Hopefully nothing. We include taxes (including RMDs—Required Minimum Distributions—which kick in at age 70-1/2 whether you need the money or not), inflation calculations to help cover cost-of-living increases, and strategies to address many retirement risks, including the cost of health care, the possibility of needing long-term care, and what happens when you lose a spouse.
Speaking of which, many people don’t realize that when one spouse dies, the couple’s smallest Social Security check stops, which could take a big bite out of your monthly retirement income. You need a retirement plan in place that addresses this risk as well as many others.
Don’t Rely on Social Security Call Centers for Advice
Don’t rely on Social Security call centers for filing advice. The staff is overworked and underpaid, they receive a high volume of calls, and they can’t legally give you retirement planning advice. The time to call them is after you’ve consulted with a retirement planner like Decker Retirement Planning who is familiar with Social Security filing rules and has software to support planning.
Consider this, in early 2018, an audit of Social Security found that 9,224 widows and widowers were underpaid approximately $131.8 million dollars. That’s an average of $14,000 each! So again, don’t contact them to find out what to do, call your fiduciary retirement advisor.
The Social Security Administration (SSA) is not staffed with advisors, they’re administrators who are really good at paperwork. There is one time that you should call them though.
Call the SSA Immediately If You’re Missing a Check
Never, ever ignore a missed Social Security benefit payment. Why? A missed payment means you could have had your identity stolen. Someone else could now be collecting your Social Security check! If you’re missing a payment, something is probably wrong, and this is one of the times when you do need to call the Social Security Administration. The SSA helps with the actual filing process and administration, including check receipt issues. And you should never ignore a missing check.
When Should You File for Social Security?
The first question most people have is, when should I file? The answer is, it depends on your situation.
For instance, if your personal or family history indicates you will have a short life, or you have lost your job and can’t find work or are unable to work, it may be best to file at age 62. For others who are working and who have a long life expectancy—who may live into their late 90s or even 100s—it might make more sense to wait until age 70 to file and therefore have a higher benefit amount for the rest of your life.
There is a lot of money being left on the table by people that are simply not filing correctly, and timing is the first issue to address. Any worker who has worked and earned a certain amount of credits for Social Security is eligible to file for Social Security benefits starting at age 62, although this age is considered “early” and the benefit amount is reduced by around 25%—permanently.
Full retirement age (and full benefit amount) is available starting at approximately 66 years old, depending on your month and date of birth. If you wait to file, benefits can accrue and grow by 8% annually up to age 70, after which the amount of monthly benefit becomes fixed.
Besides deciding when to file, there are other ways you can leave literally tens of thousands of dollars’ worth of Social Security benefits unclaimed, especially if you are 1) married, 2) divorced but married to someone for 10 years in the past, or 3) are a widow or widower.
Married Options for Social Security Benefits
If you are married, or if you were married in the past to someone for 10+ years, don’t look at your Social Security filing options as an individual. There are many, many options to consider if you’re married, if you follow spousal benefit rules. For instance, you may want to file for half of your spouse’s benefit for a while before switching to your own, an option available if you are 62 and your spouse has already filed.
Divorced people 62 or older can file for spousal benefits even if their ex-spouse has remarried or hasn’t filed for Social Security yet as long as they are eligible—without affecting the ex-spouse or their benefit in any way. (In fact, they won’t even know about it.) Similarly, widows and widowers also have many options to consider. The Social Security website contains more rules for spousal benefits.
Why You Should Work with a Fiduciary Retirement Advisor
In order to get professional financial advice about how and when to file for Social Security, find a fiduciary who specializes in retirement matters. Your fiduciary advisor should do a breakeven analysis for you using special Social Security software which can be run to optimize your lifetime benefit amount based on your family’s unique parameters. We use software called “Social Security Boost Analysis” at Decker Retirement Planning.
Remember, Social Security comes with many rules and regulations, and your filing decision is often permanent. With people living longer and longer, your decision about how to file for Social Security benefits becomes even more important.
Optimizing the way you file for Social Security can literally increase your benefits by thousands of dollars over your lifetime. We’ve helped people increase their lifetime retirement benefits by six figures just by analyzing the best way for them to file as a couple!
Make sure your financial advisor understands your situation and can address Social Security benefits. Make sure he or she understand your desires and objectives, and can help set up a retirement budget that includes your mortgage, car payments – and that boat you want or the travel plans you have in mind.
Most importantly, make sure your advisor has done a real retirement distribution plan, not a pie chart from which you’re told to randomly take 4% out of fluctuating accounts like stocks and bond funds. You need a plan that addresses reliable income when you are no longer receiving a paycheck. And you need the right amount of liquidity so that you have the funds easily accessible when emergencies arise.
Call us at 855-425-4566 for a complimentary look at your retirement situation, including ways to optimize your Social Security benefits. We are a retirement planning firm – an actual independent fiduciary holding a Series 65 license.
Decker Retirement Planning has offices in Kirkland, Washington, Seattle, Washington, and a new office in Renton, Washington for all those that are down south of the lake. We’ve also got offices in downtown Salt Lake City, Utah, and a beautiful office right downtown in San Francisco, California. We look forward to meeting you.
