I’m busy today but I wanted to share this article that I found in the June issue of Financial Planning with you. It’s titled The Greatest Benefit and it is about how planners can help people understand and plan for Social Security benefits. It’s a very complex issue (much more complex than it should be) since the benefit amounts are based on several factors:
- The income you received during your lifetime and the social security taxes you paid in.
- The age at which you begin taking benefits. The longer you put it off, the bigger your benefit is up to a point.
- Your marital status at the time you take benefits. Do you want your spouse included in your benefits or do they want to take their own benefit?
- Whether or not you work during retirement. If you work and make too much money, you’ll have to give up some of your social security benefits.
- Taxation of benefits. If you have too much income from other sources during retirement, some of your social security benefits will become taxable.
So there’s a lot to consider. The article does a decent job of explaining some of these decisions from a planner’s point of view.
Personally, I don’t like social security. When I look at the amount of money that my wife and I are paying in, we could EASILY have an additional $1 to $2 million at age 70 if we were allowed to invest the money on our own (and that’s not including the employer’s portion of the contribution). Something tells me that we’ll never see benefits that good. The government is a poor money-manager.