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
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