How to get a guaranteed 8% returnSubmitted by Financial Planning Solutions, LLC on June 7th, 2018
As a Certified Financial Planner™ practitioner, the words "8% and guaranteed" would generally never be spoken in the same sentence.
I have heard ads in the past touting these types of high returns. However, upon further investigation, there were many pitfalls and caveats attached or just plain wasn't true.
There happens to be one sure way to guarantee this 8% return.
The government, through Social Security, provides a benefit called "Social Security Delayed Retirement Credit". Basically speaking, this credit adds 8% a year to your lifetime benefit amount between ages 66 and 70. *
Generally speaking, one if eligible, can begin collecting retirement benefits as early as age 62. There is a big price to pay for starting benefits before one's Full Retirement Age or FRA. By starting before your FRA, your benefit will be permanently reduced. Starting early can also affect what your spouse could receive on your work record if you predecease them.
Bear in mind, by waiting the eight years from 62 to 70, you are ensuring a guaranteed benefit that is up to 76% higher than if you took it at age 62. (This applies to those born before 1954. The percentage is a bit less if born after 1954).
Is there ever a time that you shouldn't wait until age 70 to start collecting?
You bet. There are many scenarios to consider. The first is simply that you need the money. You simply couldn't get by any other way. Perhaps you have no savings. No retirement accounts and no pension to rely on.
Whether one is married, widowed, is a widow with small children, or is divorced can also factor in.
The bottom line is, Social Security planning can make a big difference in one's retirement years. There really aren't any absolutes when it comes to beginning your benefit as every situation is different.
One thing I urge you to do is to reach out to us before applying and we can walk through your options.
Social Security planning can be tricky. Have questions? Give us a call.
*Age 66 is one's FRA if they were born between 1943 and 1954. If you were born in 1959 for example, your FRA would be 66 and 10 months
To good health!
Questions? I'm here to help.
All the best.
Rick Fingerman, CFP®, CDFA®, CCPS®
Financial Planning Solutions, LLC (FPS) is a Registered Investment Advisor. Financial Planning Solutions,LLC (FPS) provides this blog for informational and educational purposes only. Nothing in this blog should be considered investment, tax, or legal advice. FPS only renders personalized advice to each client.
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