Life is a bucket of choices….some are easy, some not so much. But we all must take more seriously choices that will have a lifetime of consequences. Agreed? Well, that is what you are looking at when you decide on your Social Security benefit…. basically, a permanent decision.
We are going to share with you in this article a real situation…..middle America, both spouses working for most of their lifetime, just trying to keep their heads above water, raising those kids and now approaching retirement. They need to get every penny they are entitled to, so that is where Pillars LLC steps in to advise.
FULL RETIREMENT AGE BENEFIT – JOHN ($2193) SUSIE ($1387) John is 65 and Susie is 63 – their life expectancy is normal, being 85 for John and 88 for Susie.
After talking with this couple, we determined their desire was for one of them to take a benefit and for the other one to maximize their position by collecting the available Delayed Retirement Credits. They were not sure how long they want to do this, but will supplement their income with part-time jobs until they desire to both draw their benefits. Susie is starting to have some medical issues, so they want to explore all options.
PRIMARY – Cumulative lifetime benefit would be $1,023,780.69. This is the best option they have, but does not take into consideration their desires or emotions and is used for comparison purposes. With this option, John would file at age 69.2 months in the amount of $2,734.00. Susie would file a Restricted Application for Spousal Benefits at 66.8 months in the amount of $1,096 and then switches to her benefit at age 70 in the amount of $1831. Survivor Benefit would be $2,748.00.
FULL RETIREMENT AGE – cumulative lifetime benefit would be $922,839.31. both would simply draw their benefits at age 66. Survivor Benefit will be $2,208.00.
DELAYED – Cumulative lifetime benefit is $988,546.73. Both would wait at draw at age 70. Survivor Benefit will be $2895.00.
***Many people think waiting to age 70 is the best option – not so – as you see in these totals, not using a claiming strategy costs them $35,000 and income stream for 2 years****
ALTERNATIVE ! – Cumulative life-time benefits are $1,021,441.76. John begins benefits at age 70 at $2,895.00 Susie files for a Restricted Application for Spousal Benefits at age 67.6 in the amount of $1,096.00. Susie switches to her own benefit at age 70 in the amount of $1831.00. Survivor Benefit amount is $2,895.00
ALTERNATIVE 2 – Cumulative lifetime benefit is $1,009,986.23. Susie begins her benefits at age 63.7 in the amount of $1,164.00. John files a Restricted Application for Spousal Benefits at age 66.1 in the amount of $694.00. John switches to his own benefit at age 70 in the amount of $2895.00. Survivor Benefit is $2895.00
The early option (at age 62) did not come into play with this couple, as they were past that age when requesting our services. We could have given them literally hundreds of other option combinations, but these were in line with their desires.
Our job as Advisors is to keep the income stream where people are comfortable, and to maximize the Survivor Benefit. Most people do not realize that with some flexibility and knowledge of the rules and regulations, you can continue with income, improve your benefit and your survivor benefit until you decide to draw. In this real-life case, from simply drawing at age 66 to utilize claiming strategies, the lifetime benefit can improve over $100,000, depending on the option the client chooses, and the survivor benefit improved over $540 per month. Most online calculators will give you Primary, Full and Delayed benefit amounts…..….Pillars LLC gives you the Alternatives.
Your Social Security statement is the starting point for your benefits computation. Make the right choices…..they are basically permanent. Professional advice is simply a phone call away at 601-954-0699 or email us at dthompson@pillarsllc.com or visit our website at www.pillarsllc.com. Roy and Diane are both National Social Security Advisors and Roy is a former CPA of 40 years– we have your back on this one! We are Corinth, MS residents, but we service clients in all 50 states.
