Social Security Planning
Social Security Planning involves many data points and options to consider, especially if you are married, divorced or widowed.
Social Security benefits paid to recipients are primarily funded from two sources — payroll taxes collected from workers and the Social Security Trust Fund. Of these two sources, payroll taxes bear most of the burden, making Social Security primarily a pay-as-you-go system. Today, roughly 20% of all Americans are retired and supported by Social Security which would amount to over 60 Million (or 1 out of every 5) people *Source: Wiki.
Our aging population combined with all the headlines about the Social Security Trust Fund running out of money in 2033 may light a fire for younger generations to save more aggressively for their retirement.
5 Facts You May Not Know About Social Security:
- Timing Matters: You can lose about 7% of your annual benefits per year if you elect to take Social Security before your full retirement age (FRA). For example, if your FRA is 66, you would forfeit about 28% in annual benefits if started at age 62. With benefits increasing 7% each year between age 66 and 70, it may make sense for some clients to pull money from their savings accounts (or continue working) and not take Social Security until age 70.
- Non-Working Spouse: If a non-working spouse applies for her spousal benefits at FRA, her benefit will be 50% of her husband’s PIA (primary insurance amount). If she applies at age 62, her benefit will be 35% of his PIA. If she applies between the ages of 62 and 66, the percentage will be prorated. Spousal benefits are not available until the primary worker has filed.
- Married Couples: If a spouse has reached full retirement age and is eligible for a spousal benefit and her own benefit, she can choose to receive only the spousal benefit now and delay receiving retirement benefits in order to build up delayed credits on her own benefits. There are other benefit election combinations to consider between spouses.
- Beneficiary Benefits: A lower-earning spouse could elect to collect Social Security benefits early on at age 62, and the higher-earning spouse could delay claiming benefits for as long as possible, up to age 70. If the higher-earning spouse dies first, the lower-earning spouse will be entitled to 100% of what the higher earning spouse received.
- Divorcee Benefits: A divorced spouse that was married for at least 10 years can receive Social Security benefits under her former spouse’s earnings if she is 62 or older, is unmarried and she is not eligible for an equal or higher benefit based on her own earnings. It is not necessary for the former husband to apply for benefits as long as he is at least 62 and the couple has been divorced for at least two years.
Note: Consider to visit the Social Security Administration to help get you on your way to making the best decisions for your retirement, disability, survivors and Medicare enrollment options.
If you have any specific questions on your retirement and Social Security planning or would like to register for a no-obligation portfolio check-up, do not hesitate to give us a call at (561) 210-7887.