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Smart Investing Newsletter Archive

How Structuring Social Security Impacts you

Tuesday, May 16th, 2017

A major concern facing many retirees is how to handle Social Security benefits, and its impact on their individual situations. Due to the many variables influencing how benefits are paid out, there are literally hundreds of possible strategies to consider. Nearly 90% of social security recipients do not maximize their benefits which results in hundreds of thousands of dollars in missed benefits over their lifetimes.

Many miss out on their full benefit potential because they focus only on how collecting earlier or later impacts their benefit amount. In reality, income levels, new laws, taxation, marriage status, pensions, work history, and spousal impact are just a few of the factors to consider before selecting a strategy.

For example, let’s consider a couple, Jack and Jill, who are fumbling with their options. Jack was born on December 9th, 1953, has a full retirement age benefit of $2,800, and is expected to live until age 86. Jill was born on November 13th, 1953, currently is collecting $1,200 per month, and is expected to live until age 88. One option is for Jack to begin collecting now since Jill has already started. Jack’s reduced benefit would be $2,216 since he is taking early. At Jacks death, Jill would begin receiving his higher amount until she passes away. Cumulatively, they would receive about $975,000 in total benefits. Looking at another option, Jack could file a restricted application and begin collecting spousal benefits of $757 at his full retirement age, then switch to his own higher benefit of $3,696 at age 70. After his passing, Jill would then collect his higher benefit. This strategy would result in about $1,156,000 in total benefits, or $181,000 more than the previous option. These are just two possibilities, but the outcomes are vastly different, demonstrating how important it is to understand how and why benefits should be structured.

However, just because one possible strategy maximizes Social Security benefits for a couple, does not necessarily mean it is the most efficient solution when analyzing their entire financial situation. Retirement ages, cash-flow needs, and other sources of income can impact how Social Security should be planned.

Before making a decision on Social Security, take the time to research or consult with a professional on the best options for your unique situation. After all, when you decide to employ a certain strategy, you will have to live with it for the rest of your life.

If you would like to learn more about how properly structuring social security can benefit you, contact our Financial Planner, Harrison Johnson, at or give him a call at 858-546-4306.

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Brent Wilsey is president of Wilsey Asset Management and can be heard every Saturday at 8am and Sunday at 5pm on KFMB AM760.  Chase is a financial analyst for Wilsey Asset Management and can be heard every Saturday at 8am and Sunday at 5pm on KFMB AM760 as the co-host for the Smart Investing show with his father Brent Wilsey. Information is provided by Reuters.