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Social Security Planning

Social Security was established in the 1930’s as a safety net for people in retirement. After paying into the system from earnings, you receive a steady stream of income for the rest of your life. When Social Security was instituted the retirement age (65) was much closer to the average life expectancy. The founders of the system never thought people would collect benefits for 20-30 years. Therein lies the under funding issue we have today.

You can generally receive benefits as early as 62 or receive an increase for every month you delay benefits until you reach 70. The greatest variable being your life expectancy. Unfortunately, this is an unknown variable and a deeper analysis and discussion is warranted.

Social Security decisions have and will continue to be important. They will also become more complex as time passes. Thrive takes these decisions very seriously by reviewing your social security statements (now online for those not collecting) and building the benefit into your plan. Our recommendations range in complexity from delaying your benefit to advising a couple to file and suspend.

For healthy people with sufficient resources, we generally advise them to delay their benefits as the return on a future benefit is roughly 7-8%. While this increase cannot be guaranteed, the commitment from the United States government is as close as you can get. 

A more complex strategy (known as file and suspend) may be appropriate. Under current law, a spouse cannot claim a spousal benefit unless the main beneficiary claims benefits first. However, once full retirement age (FRA) is reached (age 66 for those born between 1943 and 1954), a beneficiary can file for benefits, but then immediately suspend receipt of those benefits until some future date. By doing this, his or her spouse can claim a spousal benefit and the main beneficiary can let his or her own retirement benefit grow at 7-8 percent per year. 

For more information on Social Security, please contact us today.