Pizzoferrato says that the primary consideration is income when someone is trying to decide when to start receiving benefits. “If you need your social security check . . . then you should take it.” Of course, anyone facing this problem should consider other funds available to provide income. For example, money in a bank account will generate very little interest. One move would be to use the bank funds to supplement income and let the social security payments wait—and increase.
Some people start their benefits early out of a concern that the Social Security Administration will run out of funds. Pizzoferrato says that this is not a totally groundless concern. The trustees of the fund have said that, without any further funds than what are presently coming in, social security is fully funded until 2033. In other words, without any changes, everyone’s check will remain the same. After 2033, the fund would have 77 cents for every dollar of benefits.
A tougher question is figuring out how to take social security benefits so as to maximize returns. Pizzoferrato points out that “there are literally hundreds of different combinations of when to take social security” for a claimant and spouse. Oak Harvest, Pizzoferrato’s company, provides an analysis for clients based on a client’s four page social security statement. The analysis will explain the best time and what the benefit amounts will be.
Pizzoferrato explains that, if you take social security at age 62, you are giving up a 25% deduction compared to what you would receive at your full retirement age. What that means is that, if you delay until retirement age, your social security benefit increases by about 6% per year. “If you’re not making 6% on your money in the bank,” you may want to use those funds to supplement your income and let your social security benefits increase.
Pizzoferrato wants everyone to understand that it is possible to keep working and still receive social security. The key to this is your full retirement age. If you are working and haven’t reached your full retirement age, the Social Security Administration will hold back some of your benefits while you are working. However, the withheld amounts will be reimbursed after full retirement age is reached.
People need to also understand that social security employees are not allowed to provide advice, and there are hundreds of possible choices as to when and how to claim social security benefits. Pizzoferrato suggests that people need help from an adviser like Oak Harvest Retirement Group.
Frank Pizzoferrato is a Certified Estate Planner at Oak Harvest Retirement Group in Houston, Texas. Oak Harvest is a group of Certified Financial Planners, Estate Planners and Retirement Specialists. They specialize in Income Planning, Estate Planning, Retirement Planning, Social Security Analysis, Business Planning, Annuities, Life Insurance, Long Term Care Insurance and their own Retirement Defense System. Retirement News Today is a featured network of Sequence Media Group.