Social Security Planning

Social Security was established in 1935 to alleviate poverty among the elderly during the Great Depression. Millions of Americans continue to depend on Social Security today, either as their primary source of income or a supplement to their pension and/or personal savings.

Back in 2011, in order to save $70M annually, the Social Security Administration stopped sending out annual benefit statements except to workers age 60 or older who are not yet receiving Social Security benefits. Now all individuals must go online to get their annual benefit statement. Benefit payments are also going electronic only. If you are currently receiving Social Security benefits, go to www.ssa.gov or call 1-800-772-1213 to set up direct deposit.

The key word in the title “Social Security Planning” is “Planning”. This is the crucial process of thinking about and organizing the activities required to achieve a desired goal. Social Security Planning is critical because it allows you to maximize the benefit you can receive from Social Security.

Three out of four taxpayers who apply to receive Social Security today apply at age 62. This means most eligible taxpayers have decided, whether they know it or not, to take a 25% permanent reduction in what they are eligible to receive because they did not wait to apply for Social Security until they reached their full retirement age (FRA) or later. The longer you wait to apply, the larger the amount received.

Maximizing Social Security benefits has become much more critical—now that post-retirement risk has largely shifted from the employer to the individual. Longevity risk (living longer) is another reason it is very important to determine when the best time is to apply for Social Security. Your benefit amount is based on your Primary Insurance Amount (PIA) which is the monthly benefit you are eligible to receive at FRA. Make sure you are familiar with this number (located on page 2 of your online Social Security statement).

Are you familiar with these Social Security terms designed for couples: File & Suspend, Spousal Benefits and Survivor Benefits? These are just a few of the things that need to be researched during the Retirement Income Planning process. You may be able to benefit from using any one of these strategies to maximize the amount you and your spouse can receive from Social Security. You probably do not want to leave money sitting on the table!

A large concern is when to decide to collect benefits. It will determine the size of your monthly benefit and, ultimately, the amount of Social Security income you will collect over your lifetime. Take the time to walk through some of the basic concepts. Knowing when to apply can be daunting to think about because it is more confusing than ever! You need to be well informed so that you can make the best decision for your situation. Please feel free to call my office to speak with me about your situation and this very important issue.

 Gary Webb owns Webb Financial Group, a local Wealth Management firm in Bloomington MN. Gary is a regular source of advice used by local Upsize Magazine and Star Tribune as well as national (CNN Money) media sources.

 For assistance with the type of service mentioned in this article as well as other Financial Planning services, please feel free to contact Gary Webb directly at 952-837-3215 or through email: gary@webbfinancial.com

 

 

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