Strategies for Optimal Social Security Payouts

By - Saheed Adeleke

26.06.18 10:52 PM

Social Security benefits are typically synonymous with retirement income. It would be inefficient to create a retirement plan without first estimating how much you will receive from the government.1 According to a 2018 report, Social Security benefits represent approximately:2

33% of elderly income
50% or more of income for about half of elderly married couples
At least 50% of income for 71% of elderly singles
At least 90% of income for 23% of married couples and 43% of singles

In a recent survey, more than half of pre-retirees said they expect Social Security to be their primary source of retirement income.3 With so many people relying on Social Security payouts, it makes sense to explore strategies to receive the largest possible distribution. In some cases, this could mean tapping into your personal investment portfolio to delay drawing Social Security.

If you’d like to discuss various insurance and investment strategies to help supplement part-time income or bridge the gap between retirement and Social Security, please come talk to us.

The earlier you start drawing benefits, the lower the payout will be — and your payout level is locked in for life (with the exception of periodic cost of living adjustments). Unfortunately, the most common age that people start taking benefits is the first year they are eligible. If possible, it often makes sense to wait longer so that benefits can accrue.4

If you can wait until age 70, benefits will earn an additional 8 percent a year past full retirement age for a maximum boost of up to 32 percent. Delayed retirement credits are technically accrued on a monthly basis, so even if you don’t wait until age 70, every month you delay past full retirement age will increase your payout.5

Delayed retirement credits also apply toward surviving spouse benefits. In other words, should you pass away before drawing benefits, your spouse will receive the amount you qualified for as of the month of your death.6
Social Security benefit strategies are complex, but considering the importance this income is to most retiree households, it’s a good idea to learn as much as possible to help optimize benefits for your particular situation. This Social Security quiz is a good place to start.7

1 Social Security Administration. 2018. “Retirement Estimator.” https://www.ssa.gov/benefits/retirement/estimator.html Accessed May 1, 2018.
2 Social Security Administration. 2018. “Fact Sheet.” https://www.ssa.gov/news/press/factsheets/basicfact-alt.pdf.
Accessed May 1, 2018.
3 Mary Beth Franklin. Investment News. April 25, 2018. “Future retirees expect Social Security to be main source of income.” http://www.investmentnews.com/article/20180425/BLOG05/180429953/future-retirees-expect-social-security-to-be-main-source-of-income. Accessed May 1, 2018.
4 Ray Martin. CBS News. April 30, 2018. “How to claim your Social Security benefits wisely.” https://www.cbsnews.com/news/how-to-claim-your-social-security-benefits-wisely/. Accessed May 1, 2018.
5 Rachel L. Sheedy. Kiplinger. February 2017. “Why Your First Social Security Check May Be Smaller Than Expected.” https://www.kiplinger.com/article/retirement/T051-C000-S004-when-delayed-social-security-credits-get-delayed.html. May 1, 2018.
6 Laurence Kotlikoff. Forbes. April 27, 2018. “Ask Larry: What If Either Of Us Dies Before 70?”
https://www.forbes.com/sites/kotlikoff/2018/04/27/ask-larry-%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8B%E2%80%8Bwhat-either-of-us-dies-before-70/#6f18b1ea4081. Accessed May 1, 2018.
7 Mary Kane. Kiplinger. April 18, 2018. “Do You Really Understand Social Security?” https://www.kiplinger.com/quiz/retirement/T051-S009-do-you-really-understand-social-security/index.html.
Accessed May 1, 2018.

Content prepared by Kara Stefan Communications
The hypothetical example provided is for illustrative purposes only; it does not represent a real-life scenario, and should not be construed as advice designed to meet the particular needs of an individual’s situation. We are able to provide you with information but not guidance or advice related to Social Security benefits. Our firm is not affiliated with the U.S. government or any governmental agency. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. Annuities are insurance products that may be subject to fees, surrender charges and holding periods which vary by company. Annuities are not a deposit of nor are they insured by any bank, the FDIC, NCUA, or by any federal government agency. Annuities are designed for retirement or other long-term needs. This material is intended to provide general information to help you understand basic financial planning strategies and should not be construed as financial advice. All investments are subject to risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values. The information contained in this material is believed to be reliable, but accuracy and completeness cannot be guaranteed; it is not intended to be used as the sole basis for financial decisions. If you are unable to access any of the news articles and sources through the links provided in this text, please contact us to request a copy of the desired reference.