Making the Most of Your Social Security Retirement Benefits

If you’ve heard it once, you’ve heard it a thousand times: Plan early for your retirement. It only makes sense that to fully enjoy your golden years after clocking out of your job for the last time, you should have some financial preparation and money-management tactics in place.

While the more common, well-planned strategies to prepare for retirement likely include 401(k) investments, annual contributions to your IRA, and increased funding of your savings account, provisions for maximizing Social Security benefits are often not considered. The truth is, your Social Security benefits may be a major source of your income after retirement, and incorporating their impact as part of your financial plan should be part of your discussion with your designated CFP® professional.

According to the Social Security Administration, it is estimated that only 3% of people aged 60-89 do not receive benefits. That means most elderly people rely on these benefits either as a primary source of income or as a safety net.

Here are some things to consider:

Don’t Claim Too Early

What is retirement age? You can start receiving reduced benefits from Social Security at age 62, but to become eligible for full retirement benefits, you must be age 66 or 67, depending on the year you were born.

Deciding when to start receiving benefits is an individual decision based on many things, such as whether you will continue working while receiving benefits, your family health history, if you have children or family members who will benefit from your earnings, or what your other sources of income will be. All of these circumstances can create gradual shifts in your financial stability, making the financial plan that you have in place with your CERTIFIED FINANCIAL PLANNER™ practitioner especially important as you map out your retirement years.

Whether you make the decision to retire based on unexpected events such as a companywide layoff, or you choose to retire because you are financially stable, leaving the workforce early and receiving Social Security benefits prior to age 66 will earn you a lower monthly amount for a longer period of time. AARP cautions that “you can lose more than a quarter of your benefits by starting Social Security at 62, the earliest possible age.”

Waiting until full retirement age, on the other hand, will provide you with a larger monthly benefit. Waiting even longer, until the age of 70, is even more favorable to your bank account balance. AARP explains that the Social Security Administration will “add to your benefit amount for each month between full retirement age and 70 that you delay claiming benefits.”

Regardless of what age you start receiving benefits, you can count on your payments not only arriving monthly but also increasing along with the rate of inflation.

Determining Your Benefit

Your working record, or earnings record, throughout your life is what serves as the foundation for your retirement benefit determined by the Social Security Administration. Throughout that time, you paid into Social Security taxes, which basically means the more you earned, the more you will receive in benefits.

While it is difficult to determine what your Social Security benefit will be, several factors are considered when estimating an amount:

· Your full retirement age

· Your 35 highest wage-earning years

· Your primary insurance amount (the full amount you would receive if you wait until full retirement age)

· The age at which you begin claiming benefits

· Whether you work while receiving benefits

Understanding the right time to claim your benefits, as well as being comfortable with the process, is important. In the years leading up to your retirement, count on the team at Central Coast Wealth Management to provide a keen eye and long-term planning skills to help you use your Social Security benefits to support your retirement goals.

Located at 1104 Palm Street in San Luis Obispo, California, the professionals at CCWM can help you determine the best time to file for Social Security benefits. They can develop a customized financial plan to maximize your benefit amount to fit your dreams of retirement.

Central Coast Wealth Management can be contacted through an online contact form or by calling 805-439-0370.

The Financial Professionals of Central Coast Wealth Management are Registered Representatives and Investment Adviser Representatives with/and offer securities and advisory services through Commonwealth Financial Network® Member FINRA/SIPC, a Registered Investment Adviser.

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