Putting things off until tomorrow is not usually a recommended course of action, unless you’re talking about Social Security. The longer your clients delay the start of their Social Security retirement benefit (up to age 70), the larger their monthly check will be.
There are three options for claiming Social Security retirement benefits:
Every Client is Unique
While delaying Social Security benefits is a strategy many clients use to increase the amount they receive each month, it’s not for everyone. Each client’s individual situation should be considered before making a decision. Some reasons for not delaying include:
Married couples often have a greater chance than a single person of benefitting from delaying Social Security. This is because the number of Social Security payments received depends on the lives of both spouses.
Additionally, many wives outlive their husbands, and most widows receive their husband’s higher monthly benefits in place of their own. If the husband takes benefits early, it will permanently reduce the payments not only to the him (while he’s alive) but to his widow after he dies. Delaying benefits may be a way to secure a higher survivor benefit for the wife.
Individuals with long life expectancies may receive a more significant advantage from delaying. This is because Social Security calculates the reductions and increases to payments so that, regardless of when individuals begin benefits, they will have received the same amount of money at the time they reach their average life expectancy. Living beyond average life expectancy results in income that exceeds the amount calculated by Social Security.
There are special incentives for delaying Social Security income until or past FRA if a client is still working.
An Alternate Strategy for Working Clients
Clients who are employed may want to consider supplementing their working income with Roth IRA withdrawals instead of taking Social Security benefits.
The above is provided for informational purposes only and should not be construed as investment, tax, or legal advice. Information is based on current law, which is subject to change at any time. Clients should consult with their accounting or tax professional for guidance regarding their specific financial situations.
The Retirement Strategies Group, subject-matter specialists with advanced degrees and designations such as CFA®, CFP®, ChFC®, CLU®, and JD, are ready to help.
Call
(800) 722-2333
In New York, (800) 748-6907
Email
RSG@PacificLife.com
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