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Planning retirement via Social Security

Though often overlooked, free estimates available from Social Security are helpful tools for planning retirement. As Lisa Lewitzke explains in a Money Talk Video, Social Security sends out statements projecting how much you can plan to receive in benefits. A transcript of her discussion with Joel Dresang is below.

Joel Dresang: Lisa, a retirement researcher at Boston College recently noted that one-third of workers who were two years away from collecting Social Security benefits didn’t have any idea what those benefits would be. Given that Social Security sends out statements, does that surprise you?

Lisa Lewitzke: You know, it doesn’t really. I think a lot of times people get those Social Security Statements and take a look at it and then just tuck them away. And while that might be okay if you have a lot of time before your retirement, but if that retirement date is getting closer, it might be a missed opportunity.

Joel: So, Social Security makes projections based on your earnings history and mails those out every five years beginning when you’re 25. When you’re 60, they mail them out once a year, and if you sign up on SSA.gov, you can see them anytime.

What should people be looking at when they look at these statements?

Lisa: Well, the statements tell us a number of things. The first thing that you’re going to see is what your benefits would be should you retire at age 62 – which is the earliest that you can claim, at full age of retirement, and then again at age 70.

So, it really can show you by delaying taking those benefits how it can really impact the amount you receive.

Joel: And it also shows other benefits on that statement.

Lisa: It does. It shows that if you were to become disabled and unable to work, what your disability amount would be. And it also shows if you were to pass away, what your survivor benefit would be.

Joel: So, at what age would you recommend really taking a look at these?

Lisa: Well, I would recommend probably taking a really good look at starting at 10 years out, for retirement. It’s a great place to start to kind of put that big picture together.

Look at how you’re saving. Are you maximizing your 401(k) contributions and contributing to IRAs if you can?

Talk with your spouse if you’re married. Perhaps retiring at the same time isn’t the best solution for you. So you need to kind of look at your timeline that way, as well.

And then you really want to look at your debt. Do you have big outstanding obligations in those 10 years to retirement? You know, if you do, really put a plan into place to try to pay those off before retirement comes.

Joel: What about closer to retirement, say five years out?

Lisa: Well, at five years out, you can’t afford not to look at the Social Security Statement. It’s a great trigger to kind of get yourself focused and make sure that your plan is in place.

I think that at that time you really want to make a budget. Take a look at what, your obligations are. When you retire, your finances may change quite a bit, so that budget is really important to see what you actually need.

The other thing is to look at your allocation. You know, at that time, you may want to reallocate to make sure you’re not taking on any unnecessary risk, but also that you’re continuing to grow your portfolio for that retirement need.

Joel: Lisa, those Social Security estimates are based on earnings, so the closer you get to retirement the more accurate they would be. Does it even pay to look at them when you’re younger?

Lisa: You know, Joel, I think it does. Social Security sends those out at age 25 for a reason. Time goes by so fast, and I think it’s a great tool to help keep us on the correct path for retirement.

Lisa Lewitzke is a registered representative and investment associate at Landaas & Company.

Joel Dresang is vice president-communications at Landaas & Company.

Money Talk Video by Peter May and Jason Scuglik

Also by Lisa Lewitzke

5 ways to boost your retirement
Social Security: Know your options, a Money Talk Video
Social Security File-and-Suspend suspended

(initially posted March 17, 2016)

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