If you’re like most Americans, you’re worried: Will Social Security be there for me? Can I count on it? And rightfully so. Social Security is a big part of retirement planning for many of our San Antonio clients.
There are plenty of datapoints that suggest that Social Security will definitely go broke. I saw one report that said it will go broke in 2019 and another that said it will go broke in 2043, but I have some great data that I want to share with you; some long-term projections from the Congressional Budget Office.
Instead of sharing the entire multiple-page document with you, here’s the bottom line; here’s exactly what you need to know about whether Social Security will be there for you:
The government ran 500 simulations – how many people are going to be born; how many people are going to die; interest rates; employment; all kinds of stuff. And that data shows that those born in the 1960s have a 99 percent chance of receiving 75 percent of their Social Security. Odds like that are really good. In the investment world, if I have odds like that, I love it. In the business world or even in sports, those are incredible odds.
So, here’s the deal: If I’m born in the 1960s, I’m not worried about whether Social Security will be there, because it is not likely that it will go away. If you fall into that bracket, take any worry you have about Social Security and apply that time and energy toward family, health and cashflow management or budgeting.
The Top 3 Questions Our Clients Ask About Social Security
Besides, “Will Social Security be there for me?” there are three other common questions we receive from our clients about Social Security and retirement planning. And they’re important questions, so let’s address them as well.
1. What’s the Right Time to Take Social Security – Age 62, 66 or 70?
This question is a tricky one, because, unfortunately, there’s not a one-size-fits-all answer.
The right time to take Social Security depends completely on the person or family that will receive the benefits. Social Security is a dynamic part of a person’s retirement money because it’s lifetime income that a person will receive. So there are a lot of factors that go into answering this question. Making sure you do the right thing at the right time can be a stressful decision. But it doesn’t have to be.
One way to eliminate some of that stress is by looking at your specific circumstances; what’s going on in the background. Typically, when a person worries about determining when to start taking Social Security, they only focus on just the numbers. But it isn’t always just about the numbers. I’d say it has a lot to do with those other factors, like age; the difference in age between spouses; whether an individual is married; whether they’re a widower; whether they are divorced. These are all factors that will help determine the best time to start receiving Social Security.
A lot of times, people come to me and say, “My five buddies took Social Security at 62.” But these clients’ situations may not be like their buddies.
Another situation I see is those who have done a lot of research and discovered that the longer you wait to take Social Security, the more money you will get. This is true, but that might not be the right answer either for your specific situation. It might not be beneficial for you to wait that long. Sometimes, people see that carrot that Social Security puts out there, but doesn’t consider other important factors. If you can afford to hold off, that might be the way to go, but that’s not the only way.
I recommend having a conversation with a financial advisor you trust before making this all-important decision.
2. What Will Be Extracted from a Social Security Check?
Other than Medicare Part B premiums, the only other thing that will come out of a Social Security check, which is voluntary, is tax withholdings, but that is only if you request it. You can tell the IRS and Social Security that you would like to have a portion of your benefit withheld so it can go toward your tax liabilities the following tax year. And there are different increments that you can choose.
3. How Do You Apply for Social Security and When Does It Hit Your Bank Account?
Payment cycling is what determines your payment date, and that’s tied to your birthdate.
The short answer is: You will receive your Social Security check on the second, third or fourth Wednesday of the month, depending on your birthdate.
While you used to have to go into the Social Security office to start receiving payments, today, you can apply online. You can also call the office and make an appointment.
But make sure you apply within three months of the month you want to start receiving those benefits.
You can find all of this information here.
If you’re still concerned about running out of money, contact us and we’ll guide you through that worry. We also host Social Security workshops to learn more about your options. These events are popular and seating is limited. Click here to register.
This material is provided by PAX Financial Group, LLC. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. The information herein has been derived from sources believed to be accurate. Please note: Investing involves risk, and past performance is no guarantee of future results. Investments will fluctuate and when redeemed may be worth more or less than when originally invested. This information should not be construed as investment, tax or legal advice and may not be relied on for the purpose of avoiding any Federal tax penalty. This is neither a solicitation nor recommendation to purchase or sell any investment or insurance product or service, and should not be relied upon as such. All market indices discussed are unmanaged and are not illustrative of any particular investment. Indices do not incur management fees, costs and expenses, and cannot be invested into directly. All economic and performance data is historical and not indicative of future results.
