When folks seek to retire, one of the most important objectives to evaluate is their Social Security benefits. Social Security is an excellent resource because it provides a guaranteed check for life.
However, if your clients file for their benefits too early (62), they could face up to a 30% reduction in their checks.
If your clients can delay taking their benefits till age 70, they could, of course, receive up to 132% more.
But there’s more to this story.
The downside is that, if clients delay, they are missing out on all the prior years’ payments, and, if they pass away on or before their 72nd birthday, they were unable to enjoy any cash flow from the Social Security system.
There are three main reasons why people wait:
- To receive more income from their Social Security.
- To leave a more substantial benefit amount to their spouse.
- To hedge against inflation and purchasing power.
There are many other reasons, but these are just some of the most common.
Trying to “time” filing for the benefits can be tricky; the main goal is to get the most cash flow as soon as possible — this way, the money can be enjoyed and help aid in the overall retirement income plan.
Social Security itself is a giant annuity; it provides a guaranteed stream of lifetime income benefits. The earlier clients decide to file, the lower the benefit amount since that benefit amount will be paid out for a longer period of time.