Don’t Go It Alone When Filing For Social Security Benefits

For many Americans, Social Security represents one of their primary sources of income in retirement. The decision on when and how to take benefits is a significant one with a long term impact on ones retirement lifestyle. With the different claiming ages and strategies available, a married couple literally has hundreds of different options on how to claim their retirement benefit. Why then do so many people go through the process alone and rarely give it the thought and attention it truly deserves. The Financial Advisor community has done a poor job in the past of educating and letting individuals know that they are there to help. More recently many of the top advisors have started to let people know that there is indeed help and it isn’t just for the wealthy. The wrong decision with regards to benefits has the potential to cost individuals and couples tens of thousands of dollars or more over their lifetimes.

In recent years the Social Security Administration has made many aspects of the claiming process easier for individuals. The availability to check on benefits and even file for retirement benefits online at www.socialsecurity.gov makes the claiming process and dreadful idea of having to visit the social security office in person, far more palatable an experience. Many think that if they simply go down to the social security office, the employee’s there will be able to provide them the guidance they need to make the best decision on retirement day. The fact of the matter is that the employees at the Social Security office are actually prohibited from providing advice. The only information that Social Security employee’s can offer is to provide you with what option would provide you with the highest income today. They are prohibited from analyzing your entire financial picture and look at what claiming strategy could provide you with the highest benefit over your entire life expectancy. This is the key difference in working with a qualified advisor who can work for you to provide all of the tools and options necessary so that you can make the most informed decision for you.

In the past, the choice as to when to collect social security seemed simple. If I was under my full retirement age and I was still working a full time job, I knew it was probably in my best interest to wait until 65 or 66, whenever my full retirement age happened to fall to claim my benefit. This is because of rule that limits the amount of earned income a person can have while collecting benefits before their full retirement age. Today, with clients we are looking at ways to optimize the claiming process using strategies like “file and suspend” and “restricted” applications for benefits, we are able to provide highly customized and optimized strategies for each individual client.

Two years ago, at a client’s annual review, client Bill and Joyce saw these benefits work in ways they never thought imaginable. Bill and Joyce had just turned 66 years of age. Bill had already been retired and collecting social security for the last year and a half. Joyce, who had planned on retiring at 66, her full retirement age for social security had a change of heart and decided that she would continue working 4 days a week for her current employer making well over $80,000 a year. Joyce had done her homework and she informed me that she was going to just continue working and wait until age 70 to start her benefit because the 8% increase in monthly benefit was of significant importance to her given her family history of longevity. What we were able to do was to show her how she could continue to let her own social security benefit defer and grow while she continued to work AND collect a spousal retirement benefit of around $950 a month off of her husband’s earnings record. This additional $45,000 in benefit would have simply been left off the table without working without this knowledge.

Many of today’s Baby Boomers have been contributing to the Social Security System for over forty years. With the social Security claiming decision looming so important so many Americans, one can only hope that individuals seek out the professional guidance available to help make sure that they are collecting every dollar that they system has available to them.

Joshua Farmer CFP® is a registered representative with and advisory services are offered through LPL Financial Member FINRA/SIPC. Joshua Farmer CFP® is a Partner at Brookstone Wealth Management in Oxford, MA. He may be reached at josh@brookstonewealthmanagement.com