Hot Topic: The decision on how and when to draw Social Security benefits is a hot topic in financial circles and it has made its way into everyday conversations, especially for those approaching retirement. As long as you qualify under your own work history or that of your current or former spouse, you are entitled to Social Security (SS) benefits at what is called your “normal retirement age.” For those born between 1943 and 1954, you can collect 100% of your promised benefits starting at age 66.

 

Draw Early: You can take reduced benefits as early as age 62, but be careful. Your monthly payments will be permanently reduced by as much as 25%, depending on how early you start. If you continue to work while drawing your SS early, you could also forfeit some of your benefits if you earn more than $15,480 in 2014. You will lose $1 in benefits for every $2 you earn above that $15,480 limit. (Please note that I am not referring to taxation of SS benefits. It is your total income, not your age, that determines how much of your SS benefits are taxable.)

 

Draw Later: If you draw SS benefits at your normal retirement age, you can continue to work without incurring any penalties. You can also delay taking SS until age 70. With this strategy, your benefit amount continues to increase by 8% each year that you can wait.

How to Draw: There are also filing options that can produce significantly higher SS benefits over your lifetime, such as: 1. File and Suspend and 2. Filing a Restricted Application for Benefits. Each person’s financial and personal situation should be carefully considered to make the most of these strategies.

 

Social Security Optimization: This year, I invested in a software package that lets me quickly assess the best combination of filing techniques and ages to maximize lifetime benefits. I recently completed this analysis for a couple and the improvement was $84,000. Wow!

FREE Analysis: Do you know how and when to draw your Social Security benefits? Call my office to schedule an appointment to meet with me. Bring your Social Security statements and I’ll run an optimization analysis report. There is no cost or obligation.