Wondering about Social Security?


Welcome to the first episode of the Excel in Retirement podcast show. I’m David Treece and I’ll be your host. Thank you for taking a few minutes to listen in. In today’s show we look at the ramifications of drawing Social Security early. Social Security is complex and everybody is a little different. I’ve actually heard that the Social Security rules or laws are more expansive than the IRS tax code if you can believe that…

When 62 rolls around many people begin wondering if they should pull the trigger on SS. It’s really a longevity question and how long you think you’ll live. If you start taking SS at 62 and die at 65, clearly it was a good thing…

But I want to challenge you think about it in a way that you may not have before. So, your 62nd birthday is coming up. Maybe you’re wondering should I start collecting Social Security?

If you’re still working full-time, or if you file taxes with your spouse and they are still working, it may not make a lot of sense.
Why? Because when taking benefits EARLY $1 of benefits is deducted from your Social Security benefit for every $2 of earnings over $16,920 (a). So, you’re going to end up paying a lot of your benefit back in taxes.

BUT there is a more important factor. People are increasingly living longer, so when making financial decisions it is important to consider what happens if you live to be 95 or 100 years old. According to the government (b) the number of people over 90 tripled between 1980 and 2010. With the upcoming census, these figures are sure to increase.

If you turn 62 in 2020 and you begin Social Security, your benefit will be reduced by 28.33% according to the government. Once you start it, that is the way it is (a). If you were going to collect $1,000 at full retirement age and began taking at 62, you would receive $716.70. That is a loss of $283.30 per month (a).

But let’s say you were able to wait until full retirement age and collect the full payment. According to my calculations, if you invested the difference of $283.30 and earned a compounding 4% return for 30 years, that $283.30 per month would grow to $199,211.86. When making decisions about whether to draw your benefit early, think about it as a potential $199,211.86 decision.

Everyone’s financial situation is different, but delaying Social Security for as long as possible can often seem like a good idea. When making decisions about drawing Social Security it’s a good idea to speak with a qualified tax advisor. If you would like to speak with me about any of these ideas or any financial planning questions you have I can be reached at 864.618.4800 or you can check us out at clientsexcel.com

Now for the disclaimer
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Clients Excel, LLC are not affiliated companies. Our firm is not affiliated with the U.S. Government or any governmental agency. Neither the firm nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.

I hope you’ll join me for our next show! Have a great day!

https://www.ssa.gov/planners/retire/agereduction.html

https://www.thoughtco.com/living-past-90-in-america-332151

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