May 01, 2021
Social Security | America’s Favorite Pension or Annuity
Should you take your Social Security early? or late?
Attorney and Advisor Chris Berry discusses Social Security in this episode of Daily Wisdom.
Still don’t have a Social Security Account?
Go to www.ssa.gov to create or check your account.
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Episode Transcript
America’s Favorite Pension
Hey, this is Chris Berry with Castle Wealth Group, and today we’re going to talk about America’s favorite pension or annuity system, known as Social Security. If you like this information, please make sure to subscribe and also comment down below on our YouTube channel.
Christopher Berry is a leading estate attorney and advisor in the area of retirement and legacy planning. He has been featured in publications, such as Forbes, Kiplinger’s, Crain’s Detroit, and more. He’s the host of the weekly radio show and podcast, the Chris Berry Show. He’s a national thought leader as it relates to retirement and legacy planning, and has authored the Amazon best-selling book, The Caregiver’s Legal Guide.
Today we’re going to talk about America’s favorite pension, or America’s favorite pure annuity. What am I talking about? Of course, I’m talking about Social Security. And Social Security, it’s simple yet confusing, where you can look at Social Security simply and just wait until full retirement age, if you have enough working credits, if you work long enough, and you’ll get a monthly amount. And then there’s questions of, do you take Social Security early? Do you take it at 62? Do you take it late, at age 70? What are the pros and cons?
Pros And Cons
Well, the first thing to understand with Social Security is that you should log on and create a Social Security account at ssa.gov, if you haven’t. Even if you’re not near Social Security, just to make sure that they’re counting all of your work credits, that’s the most important thing. As you’re still working, making sure that all of this is transferring over to Social Security, because keep in mind, they are a governmental program, which means that they may make mistakes. So you want to check on a regular basis, at least annually to make sure the numbers are looking correct.
And then what happens is, you pay into the system and then add a specific age you can flip on income for the rest of your life. That’s why we call it a pension. That’s why it’s a form of annuity. It’s the type of annuity that everyone has. You put in money, and then you flip on a switch, and now it annuitized and you get income for your life. That’s the purest definition of what an annuity is. Now, there’s lots of different types of annuities. There’s fixed index annuities, variable annuities, income annuities, etc. But, something that mostly annuities have is that you can annuitize them, just like that’s what Social Security is. You pay money in, you pick an age to annuitize it or turn it into a pension for the rest of your life.
And, there’s different strategies, especially if you’re a married individual with one spouse claiming early, one spouse, one spouse claiming late. From a number of standpoint if you think you’re going to live longer, then a lot of times we say you should delay taking Social Security because it grows at about 8% per year. Now, that’s said, there’s an art and science to Social Security timing. If we’re going to take Social Security early it allows you to retire and enjoy life during your go-go years, maybe we take Social Security, and then we can always stop taking Social Security to continue to allow it to grow. So there’s a lot of different Social Security timing strategies out there.
And then a big question we always get with married couples. If we have one spouse who has higher Social Security and another spouse that has a lower Social Security benefit, they might get bumped up to half of whatever the higher earner is. And then when that higher earner passes away, the surviving spouse will get bumped up to that higher amount. And that’s another reason why a lot of times with the breadwinner in the family, we want them to delay taking Social Security, because it grows their Social Security, but also it’ll grow the Social Security for that surviving spouse.
Maximizing Social Security
But, understand that Social Security should not be looked at just within the vacuum of maximizing Social Security. It should really fit into an overall income investment and tax plan. Because when you take Social Security, that’s going to affect your income, and if we’re looking at a strategy to minimize taxes in retirement, maybe we want to delay taking Social Security so we can pull money from the IRAs and use that as income, and then invest the rest, do things like Roth conversions, which will lower your overall tax burden in retirement, and what you leave as a legacy, plus it will allow your Social Security to continue to grow at roughly 8% per year. That’s the amount of your Social Security benefit will grow, the longer you delay.
So if your full retirement age is at 67, you wait to age 70, your age 70 Social Security is going to be roughly 132% of whatever your full retirement age Social Security would have been at age 67 or 66, in a couple of months, depending on when you were born.
So, Social Security, it can be simple or it can be complex. Understand it fits into the overall income plan, the overall retirement and legacy blueprint that we create for our clients. And one of the things that we can always do is what’s called a Social Security Optimization Report, where we can run about 857 different scenarios to give you one or two different Social Security strategies, so that it fits into your overall plan.
If you want more information on that, reach out to our office, Castle Wealth Group, (844) 885-4200. Feel free to visit our website, castlewealthlegal.com, and feel free to comment down below if you have any questions. This has been Chris Berry with Castle Wealth Group. Thank you, take care.
Castle Wealth Group has clients across the nation, and helps them raise plan, protect, and preserve what is important, by creating a retirement legacy blueprint.