SOCIAL SECURITY OPTIMIZATION

Social Security is a federal program designed to provide financial assistance to eligible individuals and their families. It primarily offers retirement benefits, but it also includes disability and survivor benefits. Workers contribute to the social security system through payroll taxes, and the benefits received are based on the individual’s earnings history.

The decision as to when to begin collecting social security benefits is an important one.  Benefits can begin as early as age 62 (earlier if you are a widow) and be delayed until as long as age 70.  The amount of your benefit varies based on your lifetime earnings record and the age that you begin to collect.   Between Full Retirement Age (age 67 for those born in 1960 or later) and age 70, benefit amounts increase 8% per year, plus cost-of-living adjustments; if you collect prior to Full Retirement Age, there is a reduction in your benefit amount.

In addition to retirement benefits, social security also offers spousal benefits and survivor benefits.

• Spouses of eligible workers may be entitled to spousal benefits, which can amount to half of the worker’s full retirement benefit. Understanding the rules surrounding spousal benefits is essential for couples to maximize their combined social security income.
• Widows, widowers and dependent children of deceased workers may also be eligible for social security benefits. Maximizing survivor benefits involves strategic planning, especially for couples, to ensure the surviving spouse receives the most substantial benefit.

When determining when to collect benefits, multiple factors need to be considered including whether you are or ever were married, your health, your life expectancy and other income sources and assets available to fund your retirement years.  One of the favorable characteristics of social security as an income source is that it is inflation adjusted, meaning that your purchasing power should be preserved while you are collecting benefits.

Incorporating social security collection into your financial plan is a strategic and dynamic process that requires careful consideration of various factors. By optimizing the timing of benefit collection, coordinating spousal benefits, and considering survivor benefit strategies, you can optimize the impact that social security ultimately has on your overall financial well-being.   It is important to keep in mind that each person’s financial situation is unique and the ideal claim strategy for one person may be very different than for another.  The financial professionals at Core Wealth Management will provide guidance regarding your social security collection strategy that is tailored to your specific circumstances.  You can then be confident in your decision as to when to begin to collect benefits.