5 Social Security Facts From Our Financial Advisors

By Teresa Conley | December 04, 2016

Got questions about Social Security? You're not alone. At Premier, our retirement planning advisors answer queries about this government benefit every day. We understand why investors have so many questions about SS; after all, it's a complex system. 

Teresa Conley is a CFP, Certified Financial Planner and a 401(k) Financial Advisor with Premier Financial Group in Eureka Humboldt CountyPlus, the decisions you make about Social Security -- especially when to start claiming your benefits -- have the potential to affect your retirement for the long term. Here are five facts about Social Security that retirement investment advisors wish everyone knew.

What's the Optimal Age to Claim Social Security Benefits?

While every individual situation is unique, as a general rule, while you can start claiming benefits early, you may not want to. Why? Because the Social Security Administration has a very specific definition of "full retirement age" and if you claim before that age, you'll receive less money.

Full retirement age is based on your year of birth, and currently is between 65 and 67. Claim earlier than this, and your benefits will be reduced. If you can wait to claim until later for increased benefits.

Age To Receive Full Social Security Benefits

(Called "full" or "normal" retirement age.)

Year of Birth* Full Retirement Age
1937 or earlier 65
1938 65 and 2 months
1939 65 and 4 months
1940 65 and 6 months
1941 65 and 8 months
1942 65 and 10 months
1943--1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 and later 67

However, the amount of benefits you receive is also based on the amount you earned in each calendar year and how many years you worked. Those who've left the workforce for any reason -- to raise children, health issues, school -- can earn less.

Life Expectancy: Factor Into Your Comprehensive Financial Plan

While thinking about your own mortality isn't exactly a pleasant exercise, it's necessary. Why? Because an effective retirement and comprehensive financial plan depend on planning for several different lifespan possibilities. After all, you don't want to outlive your retirement savings. 

People are living longer, and that means your own lifespan may be longer than you think. Run through different scenarios in which you take Social Security early, at full retirement age, and at age 70 in order to determine whether you'll have enough. Don't forget to factor in costs such as healthcare and expenses like travel.  And be sure to utilize your local social security branch or tax professional for assistance, if necessary. 

Coordinate Your Retirement and Financial Strategies with Your Spouse

When it comes to retirement planning, a "tag team" approach may offer benefits. For instance, retiring at different ages may greatly affect benefit amounts for those claiming spousal benefits. Under current regulations, a couple that retired at age 70 would receive 80 percent more per month than a couple that retired at age 62. 

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Don't forget to look into the Social Security benefits that are also available to married couples, divorced spouses, dependents under 18, and widows/widowers. For example, a dependent child of a deceased parent may be eligible to claim Social Security benefits. While not all of these examples may apply, it's worth doing a bit of leg work or discussing with your retirement planning advisor.

Retirement Planning Should be Part of the Wealth Planning Process

Starting the retirement planning process earlier, rather than later, is ideal. Giving yourself time to run numbers on different scenarios based on full retirement age, early retirement, and age 70 will provide you with realistic options that can help you make the best decision for your financial specific needs, goals and situation. 




Posted in Retirement Planning