SS – Drawing at FRA Transcript

Hi, I’m David Hovis, financial advisor at Hovis & Associates.  This video is the second in a series about Social Security.  Last time we discussed some implications and rules that may apply if you claim your benefit early.  Today, I’ll give you some things to consider before drawing your benefit at your full retirement age.

Once you reach your full retirement age, you are eligible for your FULL retirement benefit.  But did you realize that you can delay it even longer?  And that it will continue to grow for each year it is delayed?

Here is a little background to keep in mind:  Social Security was intended to SUPPLEMENT your income in retirement, not cover your needs completely.  Older retirees often have pensions that cover a portion of their living expenses, and the other portion is covered by Social Security and savings or investments.  However, fewer and fewer companies today are offering pension plans.  Instead, companies offer employees 401(k) plans.  This shifts the burden of planning for retirement from the employer to the employee.  Without these lucrative pension plans, workers must take responsibility for saving for their own retirement.

For someone nearing retirement, it’s important to understand all your sources of income and how best to maximize them.  When it comes to Social Security, remember that your benefit can be delayed until age 70, and by doing so, that benefit will grow approximately 8% per year, for each year it’s delayed.  That’s a guaranteed 8% growth rate.  So even though you may have reached your full retirement age, if you have other sources of income, you may want to delay claiming this benefit even longer.

For married couples, this may mean strategizing when to claim each spouse’s benefit.  In some cases, drawing the smaller of the two benefits earlier might make sense, especially if the larger of the two benefits can be delayed.  This allows the larger benefit to grow and will therefore provide more retirement income down the road.  This can be possible if other income sources are available, like pensions, savings, or investment returns.

Clients often say that they paid into Social Security, so they want to make sure they get some money back from the government.  While I can understand their feelings about this, it’s important to remove the emotions from this decision.  This should be a financial decision and you need to look at all your income sources to truly understand when the best time is to claim your benefit.

As you have seen, there is no hard and fast rule for the perfect age to claim your benefit.  The right age varies person to person depending upon many other factors.  For help with planning for your retirement, call Hovis & Associates to schedule a meeting.  You can also check us out on our website, YouTube or social media.  Stay tuned for our next video in this series……Delaying your Social Security benefit until age 70.

Until next time….