“I counted on Social Security to buy clothing, food and trips. So now I’m on Social Security and mostly use it for tips.” The Old School of Social Security has turned 180 degrees since the days of the Brady Bunch and Partridge Family hasn’t it.
- At today’s interest rates, do not take Social Security at age 62 or normal retirement age-The best annuity out there is to delay Social Security. Through delaying to 70, the top wage earner can earn the taxable equivalent of 8%. Where today can you go and earn 8% tax deferred?.The last time I looked, the top rate on a Single Premium Deferred Annuity for 8 years was a little north of 3%. Do put the difference if you do not need all your income into an avenue like an income annuity that will supplement income later. Through delaying Social Security, the top benefit of $30,000 a year at age 62, using the rule of 72, is really worth a little over $60,000 in 2021 dollars at today’s inflation rate.
- Use Spousal Strategies for the higher wage earner to start claiming benefits at age 66. For married couples, the higher wage earner might claim an initial benefit then immediately suspend the benefit and collect a ‘spousal benefit” starting at 66 and collecting the equivalent of 32% in delaying his or her higher benefit. This works if the income, disability or medical benefit under Social Security is not needed. See http://kiplingersociallsecuritysolutions.com. Through deferring this additional benefit, the higher earning spouse can also find solutions that provide long term care access, chronic illness benefit and enhanced death benefits that social security by itself cannot provide.
- Do not take IRA or other retirement withdrawals that will increase Adjusted Growth Income and make more Social Security Income taxable. Do not utilize alternative supplemental vehicles like private purpose municipal bonds if your earnings are over $44,500 filing jointly because Social Security Income can be taxed at up to 85% rates whereas tax deferred income for life is not subject to these thresholds for taxable income. Look at laddered or bucketed income annuity strategies that provide at least equivalent levels of security and safety if held to surrender or over-funded cash value life insurance strategies
Pre-Retirees and other chronologically gifted calendar -wise red zone soon-to be working less seniors are looking at Social Security differently in the millennium. If you are retired, Social Security is like seeing the minister’s wife in a low-cut gown. It’s not much but can’t look down. Eyes up and onward to using Social Security wisely and prudently. For more help on maximizing Social Security, see the Horsesmouth help below.