Social Security Optimization
Retirement is right around the corner. Are you ready?
Whether or not you’ve started planning, it’s important that you at least consider how to best optimize your Social Security distributions to earn the maximum amount and live most comfortably.
At Tactical Wealth Advisors, we aim to help retirees get the most out of their benefits. With the proper financial planning and Social Security optimization, you can earn more, live better, and experience peace of mind.
Getting started is as easy as 1, 2, 3 — simply visit Tactical Wealth Advisors, fill out the form to create an account, use the guided process to enter your financial data, and immediately start tracking your net worth, income, and spending in real time.
Sign up today to learn more about Social Security optimization and get the most out of your distributions.
Social Security can be a difficult program to comprehend at first. In order to get the most out of your benefits and live your best life in retirement, it’s imperative that you understand all of the aspects involved.
For instance, did you know that the federal government does not fund Social Security? In fact, Social Security is funded by American workers, like you.
There are a number of Social Security benefits available to you, including:
- Retirement Benefit
- Spousal Benefit
- Survival Benefit
- Child Benefit
In addition, there are other components in play that could impact your distributions, including:
- Government Pension Offset: Triggered if you receive a pension from a government job in which you did not pay social security taxes. Reduces spousal benefits by ⅔ of pension amount.
- Windfall Elimination: Triggered if you work for an employer who doesn’t withhold Social Security taxes from salary (government agency). Reduced payments for those ages 65-67.
So how can we better understand not only Social Security, but Social Security optimization? Here are a few Social Security basics that everyone should know:
- You can get an estimated PIA (primary insurance amount, or a monthly payment) by logging onto the Social Security Administration website.
- In order to be eligible for the Social Security retirement benefit, you must have earned a minimum of 40 “credits.” It’s possible to earn a maximum amount of four credits per year. To earn one credit in 2017, for instance, a worker would have to earn a minimum of $1,300 (with a max earning limit of $127,200).
- Social Security credits move with you from job to job.
- Example scenario: If born in 1974, if you earn $47,423 each year after 2014, your PIA each month would equal $1,680 per month at your full retirement age (67).
There are four primary Social Security benefits that you should know about. As mentioned above, those include: retirement benefits, spousal benefits, survivor benefits, and child benefits.
In order to better understand each benefit and how to optimize Social Security distributions, let’s take a look at a few key facts about each.
Retirement Benefit
Eligibility Age: 62
Normal Retirement Age: 67 (for those born after 1960); 65 for those born in 1937 or earlier.
Benefit Amount: PIA, Full Retirement Benefit
Early Withdrawal Penalty: 5% to 6.7% per year
Delay Credit (up to age 70): 8% per year for those born after 1943; 7.5% per year for those born between 1941-1943;
Spousal Benefit
Eligibility Age: 62
Normal Retirement Age: Same as retirement benefit
Benefit Amount: 50% of spouse’s PIA
Early Withdrawal Penalty: 5% to 6.7% per year
Delay Credit: None
Survivor Benefit
Eligibility Age: 60 (for surviving family members of primary earner)
Normal Retirement Age: 66
Benefit Amount: Max (82.5% of deceased spouse’s PIA/monthly retirement benefit)
Early Withdrawal Penalty: 4% to 6% per year (28.5% max)
Delay Credit: None
Child Benefit
Eligibility Age: Children under the age of 18 if you are receiving retirement benefit or survival benefit
Benefit Amount: 50 percent of your PIA (retirement benefit), or 75 percent of deceased person’s PIA (survivor benefit)
Before you begin your Social Security distributions, you first need to answer a few questions:
- How much income do I need in retirement?
- How long will I live, or more accurately what makes me feel more secure: a smaller benefit sooner, or a bigger benefit later?
Answering these questions honestly can help improve your Social Security optimization. When it comes to your Social Security withdrawal strategies, you essentially have three options:
- 62: Start earning your distributions as soon as possible and endure the early start penalties.
- 67: Wait until full retirement age, receive no penalties but no delay credits.
- 70: Wait until age 70 and earn the maximum amount of delay credits, and thus more money in retirement.
At Tactical Wealth Advisors, we believe the optimal Social Security withdrawal strategy for most Americans is to wait until age 70 to take full advantage of the delay credits.
In fact, the “start early” strategy can actually end up costing you upwards of $667,750 compared to the optimal strategy of waiting until age 70 (assuming a life expectancy of 90).
To summarize:
- Social Security planning and optimization represents a great opportunity to receive more value in retirement.
- Understanding the type of benefit and various adjustment items are important first steps.
- Our Social Security Optimization helps you plan more efficiently.
Click the button below to sign up with Tactical Wealth Advisors and start planning and managing your future today.
