During the last few decades, the shift from defined benefit pension plans to defined contribution plans is leaving many with less retirement security. Insufficient savings, inappropriate investments, and market volatility before or after retirement magnifies this problem.
The lifetime value of Social Security is far greater than most people realize. Using current formulas, a person who begins receiving the maximum monthly benefit of $2,533 in 2013 will receive a total of $385,000 during the first 10 years, $853,000 during the first 20 years, and more than $1.4 million if he or she lives 30 years. This assumes annual cost-of-living adjustments (COLAs) of 2.8%.
Decisions made early in the retirement process may increase or decrease benefits significantly. Claiming a reduced benefit at age 62 can leave hundreds of thousands of dollars on the table if the retiree lives well into his or her 90s. On the other hand, there are times when claiming early benefits may be the best choice.
Social Security is complex and there are few rules of thumb that apply to everyone. Optimal planning for married couples is particularly challenging. Each case must be analyzed individually and coordinated with the rest of a client’s financial plan.
Only the Social Security Administration can precisely determine benefits. However, Jones Financial will help you understand your options and prepare financial projections to assess the impact of various what-if scenarios. We will provide these services on either an hourly fee basis or as part of a flat fee comprehensive financial plan.
To learn more about the importance of sound Social Security planning, please contact us: