gmhTODAY 06 gmhToday Jan Feb 2016 - Page 25

FINANCIALLY Speaking Will You Win The Social Security ‘Game’? W hen you played tic-tac-toe for the first time, who won? My guess is it was the person who showed you the game, and you probably continued to lose, until you learned the rules of the game. It’s the same with Social Security benefits: If you don’t know the rules, you will lose, and you could lose big! Most people try to figure out how and when to take Social Security benefits on their own, not fully realizing or understanding that there are numerous strategies available to them individually and even more options if they are a couple. Add to that the almost 2.700 Social Security rules regarding benefits, and it’s no wonder most people don’t explore all the possibilities. Because of this, they are potentially leaving large amounts of lifetime benefits on the table, sometimes amounting to hundreds of thousands of dollars. Clearly, there are several right and wrong ways to maximize Social Security benefits. Here are some of the mistakes that people often make: to consider family longevity: Every 1 Failure year you wait, until age 70, your annual benefit increases by 8%, plus an annual adjustment for inflation. If you had an investment that was growing by 8% per year, you probably wouldn’t spend it any earlier than necessary! An additional 8% added for each year of waiting, can add up to a lot of money over a long retirement. considering Social Security taxation 2 Not issues: It is important to understand how and Jeffrey M. Orth is a Chartered Financial Consultant, a Certified Advisor in Senior Living, and an Investment Advisor Representative, with over 15 years of experience as a business and personal planning, insurance, and wealth management specialist. Jeff is available for group lectures and private consultations. Visit ifitfinancial.com or call 408.842.2716. 1337088RM-Oct17 when your Social Security benefits will be taxed, if you continue to work. For example, if you are married, filing jointly, and already receiving benefits, and then earn between $32,000 and $44,000, you will be taxed on half of your benefits. Above $44,000, up to 85% of your benefit can be taxed. This may make a difference in when you decide to file for benefits, or how much longer you decide to work. spousal options, including ex- 3 Overlooking spouses: As a couple, or even an ‘ex-couple’, you have options for how and when to take benefits. Does a ‘file and suspend’ strategy make sense? With this strategy, the higher wage earning spouse can file for benefits and immediately suspend them, allowing the benefit to continue to grow, while the other person receives the spousal benefit. Most divorced people don’t realize that they may be able to claim against an ex-spouses benefit, boosting their income considerably to integrate couples benefits for 4 Failure maximum lifetime income: Overlooking this area of planning can result in a costly mistake. A couple I recently worked with is projected to receive nearly a half million dollars in additional lifetime benefits as a result of understanding Social Security rules and timing issues. planning for ‘opportunity cost’: When 5 Not you wait to take larger benefits later, you may need to use money from your other investments now. ‘Opportunity cost’ is the loss of investment growth from money that is no longer a part of your portfolio. So clearly, Social Security planning is going to involve some trade-offs. 6 Not taking advantage of Social Security planning software: There are a lot of rules and strategies to consider when mapping out your Social Security retirement plan. A difficult task indeed, if you are relying on trial and error to develop a plan. Fortunately, there is some outstanding software available, that, when used by someone who is knowledge- able, can take the guesswork out of putting together an effective plan for you. Social Security planning all 7 Dismissing together: This is, in fact, what most people do, and it is a mistake you can spend a life- time paying for! Some people don’t feel they can count on Social Security throughout their retirement. They believe the old mantra: “Get all you can, while you can!” The truth is, the Social Security Trust Fund has enough money in reserves to pay full benefits until 2033. If Congress does nothing to address the funding shortfall, the government will pay three-quarters of benefits until 2088. Social Security is one of the most successful and popular government programs in history, so I wouldn’t bet against its long term survival. Like the game of Tic-Tac-Toe, if you expect to win, you need to work with an expert who knows the rules of the game. The author’s opinions, comments information, etc. are those solely his own and are independent of, and do not represent, HTK, and should not be considered as specific investment or planning advice. Please consider your options based on your individual circumstances. gmhToday and other listed entities are independent of and un-affiliated with, HTK and Integrated Financial Benefits Network (IFit). Registered Representative of, and Securities and Investment Advisory Services offered through Hornor, Townsend & Kent, Inc. (HTK). Registered Investment Advisor. Member FINRA/SIPC, 16845 Von Karman Ave, Ste. 225 Irvine, CA 92606 (949)754-1700. I Fit is independent of HTK. CA Lic #0C49291 (Not an offer or solicitation in any state where representative is not properly licensed or registered.) Loans and other policy withdrawals will reduce the death benefit amount and may be subject to surrender charges and income taxes. All guarantees are based upon the claim-paying ability of the insurer. GILROY • MORGAN HILL • SAN MARTIN JANUARY/FEBRUARY 2016 gmhtoday.com 25