Social Security turned 80 last month. Whether you like it or not, your Social Security benefits will likely play a significant role in your future retirement. If you’re Donald and Melania Trump, sure it won’t matter; however, the vast majority of Americans count on their Social Security benefits.
For many families, Social Security is their only source of retirement income. In fact, according to SSA.gov, in 2014 52% of married couples and 74% of unmarried persons received 50% or more of their income in retirement from Social Security. Even more frightening, according to this same report, 22% of married couples and about 47% of unmarried persons relied on Social Security for 90% or more of their income!
Over the past year, I’ve referenced a popular book, Get What’s Yours, by Laurence Kotlikoff which is an entire tome dedicated to discussing the nearly infinite ways you can approach taking your Social Security benefits. As of 2012 there were more than 2,700 rules governing how much individuals are entitled to receive from their promised government Social Security.
Most people don’t have the time or interest in reading an entire book on Social Security, though, so my team at Capital Investment Advisors has launched a Social Security Optimizer. This tool allows users to input their personal information and then calculates how and when they should file to optimize their Social Security benefits.
Obviously, though, no calculator can promise to give you the perfect date for when and how to take your Social Security because no one (and certainly not an algorithm) can tell you exactly how long you’ll live or what your health will look like over the next several decades. However, this tool can help you understand which path would fully maximize how much money you will receive from the Social Security system that is currently in place.
On top of being able to “optimize” your social security payments and thinking of your own health and longevity, there are a variety of other personal factors you’ll also need to consider with your spouse before deciding on when to take your Social Security. I suggest you discuss your Social Security strategy with a financial advisor who can help you fold in other factors that might not be readily apparent.
Now, there are plenty of people that will read this and say, “I just can’t wait beyond 62,” or, “I don’t want to wait.” They might think Social Security is a system on the brink and they don’t want to take the chance to wait. Perhaps you’re saying to yourself, “I’ve had too much fun in life and I’m not planning to live to 100, so it doesn’t benefit me that much to wait…” To this, I can’t argue with you. There really is no exactly right or perfect answer to the question of when and how you should file your Social Security. It will be different for every single family when the time comes.
Start with understanding how to maximize your benefits relative to your age, and then go from there. Our new Social Security Optimizer tool will be helpful with this part of the equation since it gives you a written and numerical option for how to optimize your benefits. The rest of the decision will be based on your own opinions, your unique financial fingerprint, and your specific retirement goals. Get calculating.
Certified financial planner Wes Moss offers financial and accessible investment advice to Atlanta Bargain Hunter readers.