Aaron Rheaume column: Can social security services help with the risk of longevity? | Columns
Aaron Rheaume column: Can social security services help with the risk of longevity?  |  Columns

Aaron Rheaume column: Can social security services help with the risk of longevity? | Columns

One of the questions we are often asked at Financial Enhancement Group is, when should I / we take out our social security services?

In a serious but funny way, I generally respond with, “How long do you want to live?”

It is not a question that anyone can answer with any certainty, which creates a significant risk when planning to retire. Your pension can last for a long time and you will need to have enough income to live comfortably without running out of money.

Planning for retirement income can be like hitting a moving target in the wind. The goal moves back and forth because we do not know how long you will live in retirement. Will it be a day or 40 years? However, you need the reassurance that you will not run out of income upon retirement. This is where Social Security comes into the picture.

According to the Social Security Administration, social security for just over 60% of pensioners represents more than half of all their pension income. By 2020, about 65 million Americans received over $ 1 trillion in social security benefits. Social security is a central part of the pension picture in the United States.

Social security is the cornerstone of retirement income for many Americans, and it provides a constant stream of life income that adjusts for inflation. In 2022, the increase in social benefits will increase by 5.9%. If you spend a day in retirement or 40 years, you can not survive your social security benefit.

There are many different strategies for requiring social security. The one you choose will depend on various factors, including your current savings, your health (and the health of your family members), your old goals, future taxes, and other issues.

The timing also makes a difference. Generally, you can receive benefits early (if you are willing to accept up to a 30% lower benefit), receive benefits at “normal” or full retirement age, or defer your benefits until age 70 and receive a higher payment. If you are married, the decision can also affect how much income your spouse and relatives receive.

Suppose you can afford to defer receiving benefits. In that case, you may be able to minimize the risk associated with increasing life expectancy because you will receive more monthly income from Social Security when you start taking it. It can also allow you to create a strategy to withdraw any tax-deferred assets and potentially reduce future required minimum distributions (RMDs) from tax-deferred accounts.

When it comes to making your choice for social security, there is no one-size-fits-all answer. You need to consider many variables and they need to be well thought out.

All the families we take care of at FEG are unique and their living conditions are different. So are you. If you are unfamiliar with claims strategies, you may want to consider seeking the help of a professional before signing up for your social security services.

Aaron Rheaume, CKA, is a partner and director of financial planning at Financial Enhancement Group, LLC. Contact him at [email protected].


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