If we were to ask someone when they expect to retire and they said, “When I turn 67,” we wouldn’t think twice about it. That’s because we’re around folks everyday who are either retired, considering retiring, planning for it etc. But for someone not in our shoes that knows little about retirement planning and Social Security, this would seem like a very specific age. However, it’s not a unique retirement date at all. In fact, millions in America have that same retirement “date” as well.
What if your transition date into retirement didn’t depend on when the Social Security Administration declares your Full Retirement Age? Or, when your monthly benefit caps out at age 70? When retirement planning – decisions on when to transition and how to do it financially – depends on these factors, it often signals a disconnect. The Social Security decision has become detached from the overall strategy.
Here’s what we mean; we see examples of folks that are knuckling their way through a job they despise just so they “get their full benefit” at age 67. Or retirees under-enjoying their retirement lifestyle so that their benefit can accrue a few more years until age 70. That’s painful! The problem has to do with the way Social Security decisions are approached. When Social security is detached from the overall strategy, retirees start focusing on the wrong thing.
When we use a retirement strategy that looks at current resources and an ideal transition date, it becomes focused on the right thing. Now it’s about the client’s goals and abilities to meet them rather than what they were told from their last benefit statement.
Let’s take a 64-year-old who wants to retire completely. We’ll walk them through the 4 Buckets Retirement Income Strategy℠ and see how it shakes out. By examining the resources available and showing how to allocate those resources in retirement, we can quickly determine if an age 64 retirement works. We don’t get wrapped up in “earnings thresholds,” or how the monthly benefit will be “permanently reduced.” Those phrases are internet click-bait. We’ll discuss the impact of your retirement decision, Social Security included, but we don’t lose sight of the overarching goal.
In short, don’t go near a “Social Security Optimizer” until you’ve created a retirement income strategy that you feel good about. That optimizer is built on a speculation about when you’re going to die and you likely have better things to do with your time.
Securities and Advisory Services offered through Commonwealth Financial Network®, Member FINRA/SIPC, a Registered Investment Adviser. Fixed insurance products and services offered through Lohr & Company, LLC or CES Insurance Agency.
