Make the most of Social Security-Families First Law Firm

July 1, 2016

Make-the-most-of-your-social-security-part-1MAKE THE MOST OF SOCIAL SECURITY

 

Part 1

What role do your Social Security benefits play as part of your retirement income strategy? Are you and your spouse or partner maximizing your benefits? What if you continue to work after claiming?

 

Answers to these questions were highlighted in a, “Make the most of Social Security,” webcast moderated by Kerry Sweeney Harris, vice president at Fidelity Investments. Panelists included Marcia Mantell, president of Mantell Retirement Consulting, and John Wells, a Fidelity planning and guidance consultant.

Key topics covered during the webcast included Social Security eligibility, benefits calculations, claiming strategies, and spousal benefits. Here are a few highlights, or watch the full webcast.

I retire at age 62. Do I get the full retirement age (FRA) benefit once I hit age 66, or am I locked in at a lower payment?

Marcia Mantell: As I travel around the country, everybody seems to know that you can jump in and get Social Security at age 62. But if you do that, you are locking yourself into a significant decrease in future monthly income, and this will last into your 70s, 80s, or 90s. There will be slight increases for cost-of-living-adjustments (COLA) in most years throughout your retirement, but it doesn’t replace waiting longer to claim your benefit.

The reduction in monthly benefits can be steep: 25% to 30%, depending on your FRA. That difference can be a big hit to your monthly income. So think about that before you claim early.

If you can wait and have other financial resources or can stay working, you may be able to delay claiming your Social Security past age 62. You can still retire, but your Social Security decision is a secondary decision. And if you wait, your monthly benefit will increase by 8% more per year up until age 70. That’s the last age when you still get “bonus money” added on to your monthly payment in Social Security.

How can I maximize my Social Security benefits at retirement?

Marcia Mantell: Broadly speaking, you’re going to be entitled to a certain benefit based on your own work history. If you’re an average worker retiring at FRA this year, you can expect about $17,600 per year if you’re a man and about $13,300 per year if you’re a woman.

There’s clearly a gap between the sexes. That’s largely due to the baby boom generation, where many of the women stayed home, at least for a time, to take care of the children and run the household, while the men typically stayed in the workforce. Of course, your situation will be uniquely yours, based on your work history.

Here’s the other piece of the equation. When we pay FICA taxes on our income, they’re capped at a taxable wage base, and this year that’s $118,500. If you earn over that amount, you don’t pay more into Social Security. Here’s the drawback: There’s a cap on annual benefits. So if you’ve been making a lot of money over the years, you can expect a maximum benefit of $2,663 per month ($31,956 per year) if you’re retiring at FRA this year.

And last, but not least, not everyone is taking full advantage of this very important benefit. Almost three-quarters of working Americans, when they reach Social Security eligibility, are claiming but not maximizing their benefit.

FIDELITY VIEWPOINTS  06/08/2016

https://www.fidelity.com

 

Brenda F. Nelms, Esquire, Families First Law Firm, P.L.; Sarasota, FL; Telephone: (941) 925-9070.

At Families Firm Law Firm “Where your family comes First”. Serving Sarasota, Tampa, Bradenton, Venice, Port Charlotte and surrounding areas.

 

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