Tag: Social Security

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Social Security: Choosing When to Claim

Social Security decisions matter. (Photo: YouVersion | Unsplash)

One of the most difficult decisions around retirement is when you choose to take your Social Security benefits. Deciding when to claim Social Security can make a difference in your monthly bottom line early in retirement and also influence your opportunity for a secure financial future later in life. Here are a few things to consider.

Before You Retire

Your monthly Social Security Benefit amount is calculated based on the number of years you have worked and the taxes you have paid into the Social Security Benefits program. Social Security counts the years you have paid taxes as “credits” for years that you have worked. For example, if you were born in 1929 or afterward, you must have 40 credits to receive Social Security benefits when you retire. This is equal to about 10 years of work.

Your benefit amount is also calculated by the number of credits you have earned during your working years. Fortunately, the Social Security Administration has made verifying your expected benefits easier by setting up an online account. It is worth double-checking your earnings to catch errors and factor in your expected benefits as you strategize for retirement.

What Age Should You Claim?

Several ages should be considered when deciding when to claim Social Security.

• Early Retirement Age: The earliest age you can claim Social Security benefits is 62. However, if you claim Social Security early, you will be penalized for not waiting until the full retirement age via reduced benefits.

• Full Retirement Age: This is the age when you are eligible to receive the full amount of your Social Security benefits. The full retirement age is calculated based on the year you were born. For example, for those born between 1943 and 1954, the full retirement age was 66. If you were born between 1955 and 1960 or beyond, the full retirement age rises to 67.

• Delayed Retirement Age: You can also delay the claim of your retirement benefits until age 70. If you wait until then, you will continue accruing opportunity for higher monthly income when you do retire. However, potential benefits stop increasing at age 70, so there is likely not any good reason to delay the claim of benefits past age 70.

Deciding when to claim Social Security benefits is important as you approach your retirement age. Cases can be made for taking Social Security early, late, or any time in between, but without looking at your comprehensive financial picture it’s hard to use any particular rule of thumb. The interplay between Social Security, Medicare, and other retirement decisions can have a major impact on your financial future, and sometimes you can’t easily undo decisions if you make the wrong choice!

There is a lot of information available online about Social Security, but of course we believe it’s wise to engage an advisor with experience and tools to help you make the right decision for you — and more importantly, be confident in that decision.

Gene Gard is Chief Investment Officer at Telarray, a Memphis-based wealth management firm that helps families navigate investment, tax, estate, and retirement decisions. Ask him your questions or schedule an objective, no-pressure portfolio review at letstalk@telarrayadvisors.com. Sign up for the next free online seminar on the Events tab at telarrayadvisors.com.

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When Should You Take Social Security?

As we head into the last stretch of summer, my thoughts go to my favorite part of August — my birthday! This year, I will be one year away from my ability to start drawing my Social Security benefit, albeit reduced since I would be starting at the earliest age of 62. And so I will begin the decision-making process: Should I draw, or do I wait?

Let’s start with a quick synopsis of Social Security. If you have earned income, you pay a percentage of that income into the Social Security system. The amount that you contribute over time will dictate what your monthly benefit will be when you begin receiving payments. Your primary insurance amount (PIA) is the benefit you will receive if you begin benefits at your normal retirement date (also known as your full retirement age, or FRA).

Kathy Williams

Let’s pretend I was born in 1960. Currently, if you were born in 1960 or later, your FRA is 67. What if I want to start receiving my benefits as early as possible, which is at the age of 62? Since this is five years prior to my FRA, Social Security will reduce my benefits a little for each month that I begin receiving benefits before age 67. Why? Because they will be paying me a benefit for a longer period of time than if I waited until my full retirement age of 67. A five-year (60-month) reduction is 30 percent of FRA. If my age 67 benefit is $1,000 per month, my age 62 benefit will drop by 30 percent to $700 per month. Except for certain circumstances, this is a permanent reduction in my benefit. Yikes!

What if I want to get a bigger Social Security benefit? Maybe my handsome husband is rich and I don’t need to begin taking benefits until later. Well, Social Security has a plan for that, too. For each year that I defer taking my benefit past my FRA of 67 up to age 70, I will get an 8 percent increase in my monthly check, guaranteed! This would amount to a 24 percent bump, which is a fun benefit … if I live that long. Of course, I can start any time during that three-year period and still get the raise for the months I defer.

Here is the easy math: If I begin my benefit at FRA of 67, I will get $1,000 per month. If I begin my benefit at age 62, I will get $700 per month. And if I begin my benefit at age 70, I will get $1,240 per month. How do I know which door I should choose? The only way I can give you a definitive answer is if I know exactly when I am going to die. That makes the math very easy. Other than that, my life and lifestyle will hopefully give me enough clues to make an educated decision. Here are some things I will consider:

How much money do I have saved?

How much money do I spend?

How much money should I spend?

What other income will I have during retirement?

Am I married?

Am I divorced?

Am I still working?

How’s my health?

The answers to these questions will help steer me to the optimal option available for my circumstances. I shouldn’t assume that starting at age 62 always makes the most sense “before Social Security runs out of money.” Nor should I assume that waiting to the age of 70 will always make the most sense. I would recommend consulting with my personal wealth strategist (me) to help devise my plan, and would advise you to do the same.

Kathy Williams, CFP, CDFA, is Principal and Senior Wealth Strategist at Waddell & Associates. She can be reached at kathy@waddellandassociates.com.

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U of M Puts Halt on Proposed Retirement Plan Change for Temp Workers


This Friday, six days before Christmas, a two-week layoff period will begin for temporary workers at the University of Memphis. They will have the opportunity to reapply for positions on or after January 5th.

In addition to the layoffs, temporary workers were informed earlier this month that the university would cease from contributing funding into their Social Security retirement plans. Rather, they would have workers enroll into a separate “temporary employee retirement plan.” 

The proposed change in coverage received negative feedback and opposition from workers. And Wednesday afternoon, the university’s Human Resources office sent out a message informing workers that the U of M will refrain from implementing the change until further notice.

If enacted, the alternate plan would mandate temporary workers to contribute 7.5 percent of pre-taxed wages into a private retirement fund. The university wouldn’t contribute anything into the fund.

However, the university and employees would continue to contribute the 1.45 percent Medicare tax into Social Security. 

Presently, temporary workers and the university equally contribute 6.2 percent of their earnings into Social Security.

“As is often the case with privatization schemes, the numbers don’t add up,” said a representative from the United Campus Workers. “Implementing this plan would be horrible for Social Security and Mid-south seniors, pillaging potentially a million dollars a year from the Social Security trust fund. And the plan would be a real raw deal for the workers. [The] 401(a) retirement accounts under-perform Social Security on returns and reduce the percentage of workers’ wages invested in retirement from 12.4 percent (6.2 percent employee funded and the matching 6.2 percent university funded portions) to 7.5 percent — funded solely by the employee. The chart [Human Resources] gave to employees was misleading, leaving out the employer-funded portion of Social Security and unethically presenting this policy as beneficial to the employees.”

According to the U of M, the retirement plan change would enable temporary workers to have full control of the investment options within their retirement plan. They would also be eligible to withdraw retirement funds upon separation from employment.

A PDF of a chart provided by the university’s Human Resources office regarding the temporary employee retirement plan can be clicked and viewed below.

[pdf-1]