Social Security is often an afterthought for many people when it comes to planning for retirement. Claiming Social Security can sometimes feel like a long way off, and it’s always something you plan to look at when you get closer to retirement; however, it’s important to stay aware of Social Security during your working years for several reasons.
It’s Worth What?
While Social Security pays out monthly, once you decide to start taking benefits, those payments over time can also be seen as a single asset by asking the question: what is the sum of those payments assuming we live to a ripe old age?
The answer for most of us ranges from hundreds of thousand dollars up to almost $1.3 million for some workers. While we can’t simply request a lump sum check, those payments are equivalent to that kind of value!
Compared to your other retirement accounts, this is probably a piece of your retirement picture that merits attention.
When To Take Benefits
The question of when to take Social Security can be tricky. The textbook answer is becoming 70 to maximize the benefit. If your full retirement age is 66, your payment will be 32% higher if you wait until 70.
This may not be the right answer for everyone. Do you want to work until 70? If you want to retire before 70, do you have the savings to carry you until 70? Are there health concerns that impact how long you expect to live?
The planning software we use at Buoyant Financial allows us to model various scenarios with clients to help optimize this decision based on their entire financial picture and goals; however, if you review your expected benefits periodically, you can begin to see how timing impacts this important decision.
Did They Get It All Right?
When reviewing your Social Security account, you can see the earnings used each year to calculate your benefit. If something doesn’t look right, you may want to take action. Did you have an employer withhold for Social Security, but you don’t see any earnings during your years with that employer? If something doesn’t look right, you may want to reach out to the former employer or consult a CPA specializing in Social Security. Yes, Social Security can get complicated enough that there are people who do nothing but specialize in assisting with benefits; however, these are pretty uncommon situations.
Review Your Social Security Account Annually
The easiest way to review your Social Security account, including your most recent statement and summary of expected benefits, is to create an online login.
Simply go to: https://www.ssa.gov/myaccount and create an account. Once you do this you’ll also begin receiving an annual statement via email, which is great time to login and look at the account.
Wrapping it Up
Social Security is an important part of your retirement plan. While there may not be a lot of decisions to make prior to retirement, it makes sense to give it some attention each year to review your expected benefits, and make sure your information is correct.
When retirement time comes, you’ll be glad you did!
Buoyant Financial, LLC is a registered investment adviser located in Charlotte, NC. Buoyant Financial may only transact business in those states in which it is registered, or qualifies for an exemption or exclusion from registration requirements. A copy of Buoyant Financial’s current written disclosure statement discussing Buoyant Financial’s business operations, services, and fees is available at the SEC’s investment adviser public information website – www.adviserinfo.sec.gov or from Buoyant Financial upon written request. This note is for informational purposes only, and should not be construed as investment advice, or a recommendation to buy or sell securities.
