Where do Americans go to research life’s most important questions? Most of the time, they go to Google. Regrettably, when you search “when should I take Social Security?”, more than four million pages will pop up. At first glance, you may shake your head thinking, “by the time I read all of these pages, who cares about Social Security? I’ll be planning my funeral next because of all the time its taken to read everyone’s opinons. –
Google has great information for the masses, but you don’t need blanket advice. Instead, you need customized advice that is specific to you and your family. We call Social Security, “your retirement fingerprint”, because it is unique to you. Just like your Social Security number is exclusive to you, your Social Security strategy needs to be custom-fitted.
Here are factors to tailor your Social Security benefits for your circumstances:
1. Parent’s Health History
When and how did they pass? Like it or not, we inherit our parents’ genes. We are dealt these cards by God and we must play the cards we’ve been dealt with, accordingly. If your parents lived well into their 80s and 90s, that should be very comforting that you have great genes. Now great genes will obviously not guarantee a life full of perfect health, but it is a good start. A simple formula is to take your parents’ age at death, add them together, divide that number by two, and take the new number and add another five to seven years. Why the extra five to seven years? Due to medical advancements, we have slowly been pushing the average life expectancy up ever since the turn of the 19th century.1 I have had to burst families’ negative bubble before, because they automatically planned to die in their 70s. I tell them about my oldest client, who is 104. When he was 64, 74, 84 and 94, he never believed he would live to 104 either. Do not make the mistake of underestimating how long you may live
2. Your Health History
After looking at old movies and pictures, it is glaringly obvious that we have come a long way. The TV show Madmen, set back in the 1960s, shows workers smoking inside an office building, compared to today, where men and women are taking yoga and spin classes together. People are drinking green juice and talking about their feelings. All of these are fantastic things. Every generation should be striving to actively improve our health as a whole. You have been dealt genetic playing cards by your parents, but your parents chose to play their cards differently. You don’t have to fold to vices of past generations which could negatively affect your life expectancy. Be more positive about your lifestyle decisions and you may see yourself in the mirror in your 80s and 90s.
3. Spousal Age Differences
I have a client who, when she calls, I worry. I pray it is not with bad news. Why? Tammy (not her real name) was not included in the decision making for their income decisions. Women already statistically outlive their spouse by seven years 2 , and her husband is four years older than her. Her husband’s military pension has no Survivor Benefit Protection (SBP),3 which means she gets zero income if he passes first. Also, he chose to take Social Security at age 62, which means she’ll receive the smallest check possible for her when he passes away. If he passes away first, her income will go from $85,000 a year to $16,000 a year. I was late to their party. If I could have guided them through this exercise, I would have reminded them that Social Security is not a two-for-one deal. When your spouse passes away, he or she leaves one check behind, not two.
4. Check Your Inventory
Joe at the water cooler thinks you should take Social Security at age 62, in part because that’s what he did. It is human nature for people who make financial decisions to want you to join their herd. Why? Because if they are wrong, then you’ll be wrong with them. However, Joe at the water cooler may have a completely different financial picture than you. Start by making a list of all the future income you should have in retirement, along with the assets you have that can generate income. I have encountered countless families who have CDs earning 2% but, when I show them we can exchange their 2% CDs for more (issuer-)guaranteed income that is less taxable than their CD interest, they say they never thought about that.
Your Social Security strategy is your retirement fingerprint. As you can see by these factors, it is unique and custom to your family alone. Do not let anyone discourage you when you walk through these factors and make your final decision. If they give you a hard time for delaying your Social Security benefits, just tell them, ‘thanks, but we all have different fingerprints’.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM) and/or Swan Capital. AEWM and Swan Capital are not affiliated companies. Talk to your financial professional and your tax advisor about how Social Security benefits can fit into a complete retirement income strategy. Financial professionals are able to provide you with information but not guidance or advice related to Social Security benefits. Our firm is not affiliated with the U.S. government or any governmental agency. 00631490
https://www.cnbc.com/2019/05/08/techs-next-big-disruption-could-be-delaying-death.html https://www.who.int/gho/women_and_health/mortality/situation_trends_life_expectancy/en/ https://militarypay.defense.gov/Benefits/Survivor-Benefit-Program/
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