Social Security: Know your options
Joel Dresang: Lisa, you’ve been spending a lot of time over the last few months looking at Social Security and all of the rules and complexities. Why are you doing that?
Lisa Lewitzke: Well, a lot of our clients are approaching that important time in their lives where they’re getting ready to retire, and they’re really trying to put together all the pieces of the puzzle of what their retirement’s going to look like. Social Security plays a huge role in figuring that out.
Joel: What have you been learning? I mean, I think the biggest question is when to take the benefits.
Lisa: Absolutely. People want to know do I have enough money to retire. And to figure that out, we have to decide if you can afford to take that distribution early. A lot of people hear 62, and they want to start taking those Social Security benefits because they can.
That’s great, but if you can wait until 66, 67, depending on the year you were born, you are going to end up getting a bigger check. And even more so, if you can wait all the way to age 70. That’s going to be the biggest check that you have available to you.
But not a lot of people can afford to wait until 70, and even if they can afford to, it might not be the best choice for their situation.
Joel: But you have to think it through and run the numbers and know what you’re doing. And there are a lot more options available if you’re married, as well.
Lisa: Absolutely. For a single person, there’s only a number of options available to them, mainly, when to take the distributions. But when you’re married, or even divorced, the options go into the hundreds.
There are many different claiming strategies out there. And you could really end up doing some complex strategizing on what dollar amount would be the best for you.
Joel: And what about, more people are working into retirement. What about if they take the benefits and they keep working?
Lisa: You know, absolutely Joel. People decide to claim their Social Security but then end up wanting to go back to work or work a little bit more. And they can do that, but they really need to be careful because once you start making additional money and claim your Social Security benefits, those benefits might get reduced, depending on your income. So it’s an important thing to pay attention to when deciding to continue to work.
Joel: So, and there’s a lot to consider, and there’s only a short window that you have, once you make a decision, to change your mind?
Lisa: Right. If you make a decision on what you’re going to claim, you only have a one-year time frame to back out on that decision. You can then go ahead and pay back all the Social Security benefits that you’ve gotten, but it makes you whole again to allow you to claim that Social Security down the road, at possibly a larger benefit.
So, it is important, when you make this decision, to you really know what you’re doing and what that choice means for you in the long run.
Joel: Great. Thanks. And again, you wrote an article about this for our website: Landaas.com, and it also has some useful links in there to other resources.
Joel Dresang is vice president-communications at Landaas & Company.
Lisa Lewitzke is a registered representative and investment associate at Landaas & Company.
Money Talk Video by Peter May
(initially posted April 14, 2015)
Learn more. Click for:
- A Social Security guide on when to start receiving retirement benefits
- Benefits calculators, from the Social Security Administration
- Frequently Asked Questions, from the Social Security Administration
- “When to Take Social Security Benefits: Questions to Consider,” from the National Academy of Social Insurance