Published by Scott Danek
In retirement income planning, Social Security can be very important to your financial plan. You should know about these four commonly overlooked aspects to maximize your Social Security and your retirement income.
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Your past can come back to HELP (your Social Security benefits. . .)
- Granted, being a divorcee isn’t what people plan on their wedding day. If your marriage lasted 10 years+, you can receive benefits on your ex-spouse’s record even if they have remarried. Several ‘ifs’ apply, but you should explore if you can improve your Social Security benefits in this way.
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Filing for early Social Security benefits can make sense if
- Sometimes when we plan for clients we find Social Security ‘early’ or at the age of ‘normal retirement’ doesn’t make a huge difference to the longevity of a client’s assets. In these cases, it could make sense to take Social Security early. One instance is when it comes when a client spends money on travel and ‘fun’ stuff. They often are more comfortable when they spend from Social Security instead of from investment accounts. If you put off Social Security benefits to normal retirement or even age 70, this technically does maximize these benefits. It may not be worth it though if that constrains or makes you feel reluctant to travel, etc. This is because you’re only as young and healthy as you’ll ever be at that moment in time.
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Filing for Social Security benefits as late as you can stand it can make sense if
- There are at least two instances we find when it often makes sense to take Social Security benefits as last as you can. One, if your spouse is considerably younger than you. Two, your financial planning indicates you need as much fixed income as possible. This is especially when the spouse with the higher earning ‘record’ for Social Security is older, and dies first. We find in this case the survivor will usually need every bit of their survivor benefit. All things equal, the later the deceased spouse files for Social Security the higher the survivor benefit will be.
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If you plan to work even part time in retirement, your Social Security benefits could be reduced and/or taxed
- An important component of some client’s retirement income planning is to work in retirement.
- One, having some extra ‘walk around’ money can help take the edge off your cash flow.
- Two, in some cases it will literally help makes ends meet.
- Third, it keeps people engaged and ‘in the game’, which can have both physical and mental benefits.
- There is another consideration if you decide to take your Social Security before your full retirement age. Your benefits will reduce some for each month before your full retirement age that you start taking benefits.
- Also, if you have ‘substantial income’ you’ll have to pay federal income taxes on your Social Security benefits. The government’s definition of ‘substantial’? Combined income of between $25,000-34,000+ if you’re single, and $32,000-44,000+ if you’re filing a joint return.
- Of course you should consult with your tax professional.
- This is why we often design our financial plans to start Social Security until clients are completely done working.
- An important component of some client’s retirement income planning is to work in retirement.
There is definitely a lot to consider when it comes when to take your Social Security benefits. A great place to start is to make sure your online record and account is accurate and up to date. The government Social Security website is www.SSA.gov. Beyond that, please feel free to contact one of our advisors if you have additional questions. Or if you would like us to do retirement income planning. Our goal will be to help you prepare to travel, spoil the grandkids, etc. After all, this is when ‘Every day is a Saturday’ so why not plan how to enjoy it, right?
This information may not be relied on for the purpose of determining your social security benefits or eligibility, or avoiding any federal tax penalties. You are encouraged to seek advice from your own tax or legal professional.