How First Dakota Wealth & Trust Can Help
Social Security decisions should be integrated with our tax and investment plans too. While this may seem a little overwhelming, it doesnt have to be with our help and the assistance of easy-to-follow software.
First Dakota Wealth & Trust partners with the financial planning application Advizr.coma robust technology solution that makes it easy to track your financial plan. This tool equipped us with the resources to run simulations that illustrate probability levels for different Social Security strategies as well as retirement withdrawal strategies.
Alongside investments, our Wealth & Trust Officers can help you determine how much you should save for retirement, and when you do retire, we can help you create a spending plan that aligns with your objectives. With our goal-based cash-flow planning, we can work with you to create an income plan specific to you and your goals.;
to get started on a plan thats tailor-made for you.
First Dakota Wealth & Trust is the fiduciary investment department of First Dakota National Bank with trustee powers to serve clients during their lifetime, during incapacity, and after death. We help clients develop a financial roadmap to help simplify their financial future.
Dont Take The Ssas Advice At Face Value
Going straight to the source seems like a great way to get accurate information about the best time to file for Social Security. But its not.
The Social Security Administration representative you talk to might have good intentions when they offer advice about your specific circumstances. However, because this person is likely overworked and undertrained, they may give you incorrect information. And it could cost you tens of thousands of dollars throughout your retirement.
If you do ask the SSA for advice, youd be wise to consult with at least one financial advisor who specializes in retirement planning to get a complete picture of your options.
If you discover the mistake later, you might not be able to correct it, even if it stems from faulty advice from the SSA.Thats the SSAs own rule. And many claiming decisions are irreversible.
Social Security: 10 Smart Ways To Get More Benefits
Without Social Security benefits, 22 million Americans would be poor; per a report from the Center on Budget and Policy Priorities. About 21% of married elderly beneficiaries and 44% of unmarried ones get fully;90%;or more of their income from Social Security, while about 48% of married elderly beneficiaries and 69% of unmarried ones get 50% or more of their income from it, according;to the Social Security Administration.
How much money are we talking about? Well, the average Social Security retirement check was recently;$1,417, or about $17,000 annually. If that doesn’t seem like much, know that there are ways to increase your benefits. Here are 10 strategies to consider:
Let’s examine each in more detail.
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Withdraw Your Social Security Application
Heres one opportunity to reverse a claiming decision you regret. If youre within the first 12 months of claiming and you have enough cash available, you can withdraw your application and repay all the benefits youve received so far.
If you do, then it is like you never claimed in the first place, says Arthur Prunier, a retirement income certified professional® instructor at the American College of Financial Services.
Lots of people file for Social Security without fully understanding the consequences, he explains. For example, many people choose to claim Social Security before full retirement age, but later wish they had not done so.
After repaying what you received, you can claim a tax refund or credit for any taxes you paid on those benefits.
Tips For Retirement Planning
- Even after you max out your benefits, chances are Social Security wont pay as much as what you earned. To make up the difference, youll need to draw on your nest egg. To find out how large a nest egg youll need, use our award-winning retirement calculator.
- As you approach retirement, you may be uncomfortable keeping your savings in the stock market. In that case, you may want to buy an annuity. A financial advisor can help you determine what makes the most sense. And SmartAsset can help you find a financial advisor. Just use our;matching tool.;Itll recommend three advisors based on your preferences and goals.
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Claim Spousal Benefits And Delay Yours
If you and your spouse were born before January 2, 1954, and have both reached full retirement age, you can claim spousal benefits and let your own benefits keep growing. Then, when you reach age 70, you can switch to your higher benefit.
One caution: You can’t have claimed your own benefit if you want to make use of this “restricted;application,” as it’s called.
In order to claim a spousal benefit, your spouse must have filed for their own Social Security benefits .
Increase For Delayed Retirement
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If you’ve already reached full retirement age, you can choose to start receiving benefits before the month you apply. However, we cannot pay retroactive benefits for any month before you reached full retirement age or more than six months in the past.
If you decide to delay your retirement, be sure to sign up for just Medicare at age 65.
If you do not sign up at age 65, in some circumstances your Medicare coverage may be delayed and cost more.
If you retire before age 70, some of your delayed retirement credits will not be applied until the January after you start receiving benefits.
For example, if you reach your full retirement age in June, you may plan to wait until your 69th birthday to start your retirement benefits. Your initial benefit amount will reflect delayed retirement credits earned from your full retirement age through the year before your 69th birthday. In January of the following calendar year, your benefit will increase for the credits earned in the year of your 69th birthday. Our Online Calculator gives you an estimate with all credits applied for comparison purposes.
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Coordinate With Other Household Members
When one spouse has earned significantly more than the other, it’s more important for the higher earner to delay benefits. If necessary, the lower earner can sign up to help the couple out financially until the higher earner is ready to claim. Then, the Social Security Administration will automatically switch the lower earner over to a spousal benefit — up to 50% of the higher earner’s Social Security benefit — if it would give them more than what they qualify for on their own.
Though rare, you may be able to claim Social Security benefits for others in your household as well, like minor or disabled children. Take advantage of all the benefits your household qualifies for to help your personal savings stretch even further.
It’s a good idea to have a Social Security plan in place, even if you’re a long way off from retirement. It could change over time, but by having a rough idea of what you intend to do, you can easily work out how much you need to save on your own in order to cover all your living expenses in retirement.
The $16,728 Social Security bonus most retirees completely overlook
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Dont Follow The Crowd
Social Security can be confusing. Its certainly easier to go along with what your relative, colleague or neighbor is doing. Yet because everyone has a different situation and there are many claiming strategies out there, you should determine whats best for you based on your age, life expectancy, income needs and other retirement assets. After all, a few small mistakes can take a big hit on your golden year goals.
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Strategy #: Understand The Range Of Benefits Available
Contextualize your retirement earnings by analyzing how much your income would be each month if you drew on Social Security at each age and contrasting this with your lifetime benefit at each age. This is called an income gap analysis, which you can conduct using the estimated benefits provided by Social Security. Social Security offers a number of useful calculators to help you get a better grip on your benefits and retirement at .
Whats Full Retirement Age
Full retirement age is when youre eligible to receive full Social Security benefits. Your full retirement age depends on your birth year: Under current law, if you were born in 1951 or later, your full retirement age is now some point after age 65all the way up to age 67 for those born after 1959. If you were born before 1951, youve already reached age 66 and full retirement age.
Retirement ages for full Social Security benefits;
If you were born in
Your full retirement age is
1950 or earlier
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Avoid Social Security Tax Traps
Either 50% or 85% of your benefits can be subject to federal taxation. In 2020, income tax is imposed on 50% of your Social Security check if your combined income falls between $25,000 to $34,000 for single filers and $32,000 to $44,000 for joint filers.
For single filers with more than $34,000 in combined income and joint filers with more than $44,000, you can look forward to an income tax of 85% on your Social Security benefits. If youre looking to; avoid this, try reducing your taxable income to reduce the amount of taxes. This can be achieved by looking at all of your adjusted gross income and evenly distributing your funds over the span of a few years, so there are no sudden increases or decreases.
Finally Claim Your Benefits When You Turn 70
When it comes to claiming your Social Security retirement benefits, you can start at any age once you’ve reached 62. The longer you wait, up until age 70, the higher each monthly benefit check will be.; Of course, this involves trade-offs.
For one, the later in life you start collecting, the fewer total checks you will receive. That may turn out to be less total money over your lifespan, depending on how long you live. On a somewhat related note, consider how active you’ll be later in your retirement versus early in it. It may make sense to get your money earlier and have it available when you can best make use of it, instead of having a bit more come in each month later, when it matters less to your lifestyle.
In addition, remember that if you’re not collecting Social Security, you have to cover your costs by some other means. That means you’ll either need to be working or have a pension or other savings that can cover your costs while you wait to start your Social Security benefit. On a somewhat related note, know that Medicare’s hold-harmless provision only applies if your Medicare Part B premiums are deducted directly from your Social Security benefit.
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No : Look Into Survivor And Disability Benefits
You may be able to get more money from Social Security than you thought if you’ve been widowed or are disabled or related closely to someone disabled. That’s because Social Security offers survivor and disability benefits and even retirement benefits for dependents of retirees in some cases. If your spouse passes away, you may be able to claim survivor benefits and your children may receive them, too, through age 17. Social Security offers disability benefits, also, to people of all ages who qualify.
About The Author: Anthony Bartlett
Anthony Bartlett, ChFC, CASL, AEP, RICP, is the registered principal and CEO of Bartlett Wealth Management where he specializes in wealth management. He has been advising clients on retirement distribution strategies since 1991. He served as a National Board member for the Society of Financial Services Professionals and then continued thru the executive roles of National Secretary, President Elect, President, and completed his role of Immediate Past President in 2018.
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Get Your Social Security Estimates
The SSA website provides estimates for how much you’ll collect if you start receiving benefits at age 62, your full retirement age , and age 70. Remember that you don’t have to start taking your benefits at those milestone ages; you and your spouse can start collecting anytime between ages 62 and 70.
What If I Change My Mind
If you receive Social Security benefits at a reduced rate, but then change your mind, you have the option of withdrawing your application and paying back to the government what you’ve already received . Then, you could restart benefits at a later date to take advantage of a higher payout. But you are limited to one withdrawal per lifetime.
For example, let’s say you elected to receive early benefits at age 62, but then decided to go back to work at age 63. You could withdraw your Social Security application within the first 12 months of receiving benefits, pay back the years worth of benefits you received, go back to work, and then wait until a later age to restart your benefit checks at a higher level.
For important details about repaying benefits please read the SSA publication If You Change Your Mind.
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Maximize Your Household Benefits
If you have a spouse or minor children, you should consider how your claiming strategy affects them. This might mean using a different benefit strategy than the one youd use to maximize your own benefit payment.
How else might you maximize your households Social Security benefits? The oft-heard advice is to postpone claiming until age 70 if you can afford to. But that may not be the best option if youre in your 60s and still have minor children at homenot uncommon in blended families. In this scenario, you might receive more benefits in the long run by claiming at a younger age so you can receive dependent benefits.
The dependent child benefit is equal to half of the claiming parents full retirement benefit, even if the parent claims early. The younger spouse may also be eligible for a spousal benefit. These additional benefits may offset the lower benefit you receive by filing early.
Factors that affect this decision include:
- The number of children who are in the household
- How long it will be until they turn 18
- The amount of your spouses benefit
- The age gap between the spouses
Your claiming decision affects family members. If you voluntarily suspend your own benefits, no one else can receive Social Security benefits based on your earnings record.
Get Payments For An Ex
If you aren’t married, but you were in the past for at least 10 years, you may still be able to file for spousal or survivor benefits. They would be based on your ex-spouse’s earnings. Too many divorced people are not aware of their payment options based on an ex-spouse’s earnings record. Look at all your choices so that you can claim in a way that makes the most of your income when you retire.
Will I Have To Pay Taxes On My Benefits
Depending on what your combined income is each year, you may end up having to pay federal taxes and perhaps even state and local taxes on a portion of your benefits.
To calculate your combined income , add your adjusted gross income plus nontaxable interest income plus half your Social Security benefits. Up to 50% of your benefits may be taxed by the IRS if the amount you come up with is $25,000 to $34,000 as an individual or $32,000 to $44,000 as a married couple filing jointly. And up to 85% of your benefits may be taxed if your income is above that threshold.
This is where proactive planning can really help your bottom line but it means keeping a close eye on how all your retirement income streams are taxed. For example, instead of taking withdrawals from a tax-deferred retirement account, you may want to convert that money to a Roth. Roth withdrawals are not taxed and are not counted toward combined income.
Use These Strategies To Increase Your Household’s Lifetime Benefits
If you’re approaching retirement, now’s a good time to learn how to maximize your Social Security benefits. Some little-known strategies could boost your households benefits, whether you live alone or still have minor children at home. Here are six ways to get the most out of your retirement benefits.
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Collect Too Early Withdraw Your Application
If you decide to start receiving your benefit but later realize you should have waited, you have a chance to reverse it.
You have a 12-month window from the time you start receiving your benefits to withdraw your application. Youll have to repay any benefits you received during those 12 months, but it allows you to go back to accruing benefits as though you never filed.;