I’m at the age when I could begin to take my Social Security Benefits if I wanted. Or I could wait. What are some of the key analyticals that could help me make the decision?
This question is quite common among people who are close to reaching 62 years old. The Bipartisan Budget Act of 2015 made significant changes to several often-used Social Security claiming strategies for married couples that took effect on April 30, 2016.
Regardless of your age or marital status, these are some of the most important factors you should consider in your decision-making process:
- Health. What is your outlook for your health through your retirement? Has your health situation changed? Your expectations about your health can affect your decision to accelerate or defer benefits.
- Longevity. What is your family history in terms of life expectancy? Have your parents and grandparents enjoyed lengthy, active healthy lives? Or is the opposite true? Do you (or your spouse) have a health condition that reduces life expectancy? None of us can predict how long we will live, but reasonable expectations may affect your claiming choices.
- Genuine need. Based on cash flow expected from your investment portfolio and anticipated expenses, how much will you rely on Social Security benefits to meet your everyday expenses? Would you be better served by delaying claiming your benefits and allowing them to grow for some years?
- Current investment climate. When deferred, Social Security benefits grow at a fixed percent per month. You’ll want to compare that rate with the potential (but likely variable) returns your investment portfolio may provide. Ask your Financial Advisor to prepare a Social Security Calculator analysis and report for a personalized illustration.
- Quality of life. You’ll want to optimize your quality of life, especially during retirement. Is it a higher priority for you to have extra income from Social Security benefits now or to secure a higher amount later by waiting to claim benefits?
- Survivor needs. Is it important for you to provide a potentially higher benefit for a surviving spouse?
The overarching theme in all these considerations: Discuss the practical goals you are trying to achieve for both your Social Security benefits and retirement lifestyle with your Financial Advisor before making a claiming decision.
How can I make my decision-making process easier?
A member of the Axiom Financial Strategies Group team can prepare a personalized illustration of your potential Social Security benefits using the Wells Fargo Advisors Social Security Calculator. This sophisticated software can help analyze many of the Social Security benefit scenarios available to you and help you evaluate which one may best fit your personal circumstances. Give us a call to set up a free consultation.
This article was provided courtesy of Michael Grau, CFP®, RICP®, Vice President – Investment Officer with Axiom Financial Strategies Group of Wells Fargo Advisors in New Albany, IN. He can be reached via email at [email protected] or phone at (812) 948-8475. Visit our website www.AxiomFSG.com.