Tuesday, November 4, 2014

You Are Single - How Does Social Security Fit Into Your Estate Plan?

By:  Susan M. Graham, Certified Elder Law Attorney, Senior Edge Legal, Boise, Idaho

Retirement has many parts.  How much predictable income you receive when you are no longer working is a critical concern, and Social Security is part of that retirement income picture.

If you have not signed up for Social Security retirement benefits, stop and think about it before you make your irreversible election.  There are a variety of choices, and some will give you up to 30% more money from Social Security.  The challenge is to decide what fits best for you. 

There are many variables that impact the amount you will receive from Social Security. Some of those variables include (1) your age when you make the election; (2) your history of earnings; and (3) if you were divorced after 10 or more years, and never remarried.

This article will address the age you begin taking Social Security.  

Your benefit amount is locked into the starting date you select: (1) age 62; (2) your retirement age (ranging between age 65-67); and (3) age 70.   If you take your benefit at age 62, you will receive 75% of the full retirement amount, and if you wait to take your benefits until age 70, you will receive 132% of your retirement benefit.  Here is an example:  A baby boomer earned the maximum social security throughout her career and turned 62 in the year 2013.  If she signs up for Social Security at:

  1. Age 62 - she will receive $1,913 (75% of $2,550) monthly for the rest of her life
  2. Age 66 - she will receive $2,550 (100%)
  3. Delaying until age 70 - she will receive $3,366 (132% of $2,550) 

Assuming the retiree lives another twenty years, she will receive a TOTAL benefit from Social Security (ignoring a cost of living adjustment) if she retires at:

  1. Age 62 -> $459,120 ($1913 x 12 months x 20 years)
  2. Age 66 -> $612,000 ($2550 x 12 months x 20 years)
  3. Age 70 -> $807,840 ($3366 x 12 months x 20 years)

Waiting until age 70 means she will receive almost double the retirement benefit compared to starting at age 62.  To locate the Social Security Calculator on the government website, Google “Social Security Quick Calculator.”  It is worth the time it takes for you to make this important election that will impact on your future.  Does it make sense for you to be part of the 65% who take benefits at age 62 and miss out on hundreds of thousand of dollars of potential benefits?[1]  You decide.


[1] “The Smart Investor, 5 Social Security Facts You Need to Know,” by Tom Halloran, October 28, 2014, U.S. News and World Report

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