Silver and Secure

Social Security - When Should You Take It?

One of the biggest financial decisions retirees face is when to start collecting Social Security benefits. The timing can mean tens of thousands of dollars over your lifetime.
YOUR OPTIONS:

Age 62 - earliest you can collect, but your benefit is permanently reduced by up to 30%.

Full retirement age - you collect your full benefit. For most people today that's between 66 and 67.

Age 70 - maximum benefit. Your payment grows by 8% for every year you delay past full retirement age.

That 8% annual growth is guaranteed and risk-free. There's almost nothing in the financial world that matches it.

So why do so many people take Social Security early? Usually because they need the income, they're worried about the program's long-term solvency, or they simply don't realize how much they're leaving on the table.

For married couples the strategy gets more nuanced. The higher earner delaying as long as possible can protect the surviving spouse with a larger benefit for the rest of their life.

The right answer depends on your health, your other sources of income, whether you're married, and how long you expect to live. This is a decision worth running the numbers on before you make it.

Reach us at [email protected] or 830.406.6654.

How Annuities Are Like Social Security

One of the easiest ways to understand how an annuity works is to compare it to something most people are already familiar with - Social Security.

HOW SOCIAL SECURITY WORKS:

You contribute money over your working years and in return receive a guaranteed monthly payment for the rest of your life. It doesn't matter how long you live - the payment keeps coming. Delay taking it and your monthly benefit increases.
HOW A FIXED ANNUITY WORKS:

You contribute a lump sum to an insurance company and in return receive a guaranteed monthly payment for life - or for a set period of time, depending on how you structure it. The longer you wait to start receiving payments, the larger those payments can be.

Both solve the same fundamental retirement problem - longevity risk. That's the risk of outliving your money. Neither one cares how long you live. The payments keep coming regardless.

The difference is that Social Security is managed by the federal government and funded through payroll taxes. An annuity is a private contract with an insurance company, funded with your own savings.

For people who don't have a pension and are worried about making their savings last, an annuity can essentially create a second Social Security-like income stream in retirement.
Reach us at [email protected] or 830.406.6654.