- Millions of people are waiting to age 62
to start collecting their Social Security.
Unaware of the fact,
that this could cause them and their families
tens of thousands of dollars during their retirement.
In this video I will share with you
how to think about this very important question
and how to maximize your Social Security benefit.
Hi, I'm Mark Singer.
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more up-to-date and timely information
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Let me go to my screen
and let's take a look at today's lesson.
The first danger is permanently reducing your benefit.
The age you first begin taking Social Security
plays a big part in how much you receive in your benefits.
You can start benefits before reaching
your full retirement age,
but then you get less per check
to account for the extra months you're receiving benefits.
If you begin right away at 62,
you'll only get 70% of your scheduled benefit
with a full retirement of 67,
or 75% with a full retirement of 66.
Over a lifetime this reduction
could cost you tens of thousands
or even hundreds of thousands of dollars.
Consider recipients entitled
to a one thousand dollar monthly benefit at 67.
If they begin benefits at 62,
they'll only get $700.00 per check.
Assuming they live to 90,
they'll receive $235,200.00 in benefits starting at 62.
But if they wait until 67,
it means five fewer years of claiming benefits,
but because each check is larger,
they'd end up with $276,000.00 overall.
That's a difference of nearly $41,000.00.
And this amount could be even greater
if they were to live longer,
or were entitled to a larger Social Security benefit.
And most of the people I work with
are entitled to anywhere
from $2,500.00 to $3,000.00 a month,
so this $41,000.00 mistake
could end up costing them a hundred
to $125,000.00 over their lifetime.
If you wanna maximize your retirement lifetime benefit
you should usually delay Social Security
at least until your full retirement age,
or up to 70 if you can afford to.
This is when you're entitled
to the maximum of 124% of your scheduled benefit
if your full retirement age is 67,
or 132% of your full retirement age,
if it is age 66.
Now here is a slide that gives you a sense of,
blow-by-blow,
why it's important to delay these benefits.
You can see here,
if you take a look at the...
If your full retirement age is at 67
and we assume a primary insurance amount of $2,800.00,
and an annual inflation,
the cost of living of 2.6%.
That if you were to take it at age 70,
the benefit moving all the way to the right column
would be $1,960.00.
Or if you waited til your full retirement age of 67,
that benefit would actually move up to $3,183.00.
But if you waited to age 70,
if you could,
that benefit along with the cost of living increase,
all the way to the right-hand side and on the bottom,
is over $4,200.00.
More importantly,
why delay benefits,
'cause there's more income later on.
If let's say you reach age 70,
if you started claiming at 62,
you'd only be getting $2,407.00,
versus if you waited til age 70 to claim,
you'd get over $4,260.00.
If we assume you live to age 85,
let's assume you started your claim at 62.
You would be getting $3,537.00 at the age of 85,
versus if you waited to age 70 to claim,
you'd be getting $6,286.00;
a significant increase.
So it's really important to take pause (chuckles)
when you reach age 62,
maybe it's not the right time to collect.
Danger number two is if you are still working
and you claim before full retirement age,
now we have another video entitled,
"The Tax Torpedo."
So if you wish to watch a full description of that,
you can click on the link below to learn more.
So the Annual Earnings Test really is for those
who apply for Social Security
before their full retirement age.
If they do so,
$1.00 in benefits will be withheld
for every $2.00 you earn over the amount of $18,240.00.
Actually the withholding's will come back to you,
piece by piece at full retirement age,
but it will take time,
it's a complicated formula.
I suggest you don't let
the Annual Earnings Test discourage you from working,
but really to avoid this danger of having to...
Not only your Social Security taxed,
but also being hit with a tax and a withholding,
make sure that you don't start collecting
your Social Security until after your full retirement age.
Now danger number three
and the final danger we'll talk about today
is what we call the Tax Burden.
And again we did an entire video on the Tax Torpedo,
feel free to look at that on the link below.
Many people are not aware of the fact
that Social Security is taxable.
Let's take a look at this chart,
if you are married and filing jointly,
and you earn over $44,000.00,
which is the vast majority of the people I work with,
then up to 85% of your Social Security benefit
will be taxed at your income tax bracket.
If you're single,
that number is just $34,000.00,
so not a lot of income. (laughs)
And what happens is they add up your provisional income:
it equals your adjusted gross income,
plus one-half of Social Security benefit,
plus your taxable exempt interest,
usually municipal bond interest.
If that number for the provisional income
is over that $44,000.00 threshold,
or that number is over the $34,000.00
for the single or head-of-household,
then again, your Social Security benefit
will be taxed at a rate of 85% at your income tax rate.
I would like to refer you to a study that was done last year
by United Income entitled,
"Americans Lose Trillions Claiming Social Security
"At The Wrong Time."
The conclusion of the study was
that 96% of retirees choose the wrong year
to tap Social Security.
Matt Fellowes who was
the Chief Executive Officer of United Income,
said, "People are pretty much doing
"the opposite of what they should be doing."
He stated that,
"Most people are better off waiting until 70 to claim,
"however 43% of adults actually are better off claiming
"before age 70."
So it's really important to understand
all of the various strategies that are available to you,
because the big takeaway from the study was,
if you did it right and you claimed at the right time,
more than half of retirees
would see their income in their 70's and 80's
rise by more than 25%.
It is confusing.
There's over 567 different claiming strategies
in order to maximize your Social Security benefit.
If you're interested in learning more,
if you wanna learn how to put together
your own customized retirement income plan
and find out what we do for our clients,
click on the link below to become my client,
to understand more about what we talk about,
what the process is,
and how you could benefit.
I hope that you enjoyed this video.
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Thank you very much for watching
and I certainly hope you do enjoy the retirement journey.