If we knew our expiration date retirement, planning would be a lot easier. But since we don’t, we should consider that we will live at least 30 years in retirement. That is, unless we know from our genetic makeup, it’s not likely to happen. Then again, what if…?
When looking at your retirement scenario many people will consider Social Security as the anchor of their retirement plan. Unfortunately, here again, many fail to properly plan to collect their Social Security benefit, and as we know, that means in most cases, we plan to fail.
Claiming Social Security is easy! You reach age 62 and you can start to collect. Fifty percent of you will take the option to collect early. Reasons vary, but the most unfounded reason to collect at age 62 is “I don’t know if it will be around when I get older and I want to get as much as I can before it runs out”. Let’s dispel this notion. First, the trust fund is fully funded until 2034 as it stands today.
Second, there are a couple of proposals in Washington currently that will shore it up for another 75 years. One of which is to raise the amount from the current level of $118,500 to $250,000 that is taxable. You and your employer currently pay 6.2 percent each or $7,110. At $250,000 that would bring your contribution to $15,500. Add in your employer’s contribution and SS will bring in $31,000 on a high wage earner. Alternate plans are to increase the current withholding by 2 percent additional, which would affect all contributors and not just those making larger incomes.
Now if Social Security is the basis of most retirement plans wouldn’t it make sense to try and maximize that amount? A couple living to a little over their average life spans could be leaving $500,000 to $800,000 on the table and walking away from this additional money. All because they failed to plan!
That extra $16,000-$26,000 a year will go a long way in keeping many couples afloat in retirement.
With proper planning, a couple can live a long, healthy, less-stress retirement knowing that the surviving spouse will not become destitute when one of the Social Security checks stops coming in. It is a sad statistic, but 40 percent of widows are currently living below the poverty line because of the amount of Social Security they are drawing.
I get many calls from people that didn’t plan and are struggling to get by financially. There is nothing I can do after the fact to help people in this situation. There is no after-the-fact planning to raise the Social Security benefit. Once the mistake is made, you own it, I’m sorry to say! Do yourself a favor and plan.
If you’d like a no-obligation review of your future Social Security benefits, please call me at 786-450-2560. Phil Lyons, Retirement Income Certified Professional.
