Social Security Benefits: How to Maximize a Crucial Part of Your Retirement Finances

Social Security provides income to you and your dependents in a way that virtually no other financial account can.

• It provides automatic cost of living adjustments; and
• You don't have to be an investment expert to use it.

Social Security can help address a significant fear for most everyone — outliving your income. And, unlike many retirement plans that pay out a fixed, level benefit, Social Security adjusts as the cost of living goes up. Finally, you don't have to be a financial expert to receive a Social Security benefit — the ups and downs of financial markets or reinvestment and sequence of return risks don't apply.

Qualifying for Social Security

To receive Social Security benefits, you need to have 40 credits (formerly known as 'quarters of coverage.') The most credits you can earn in a calendar year is four — and you qualify for four credits as rapidly as you earn them.

• Your retirement benefits are available to you as early as age 62. Your spouse can also receive benefits based on your work history as early as when they turn 62. This is known as a spousal benefit.
• If you die, your surviving spouse can receive survivor benefits as early as age 60. This is known as a widow/widower's benefit.
• All benefits are based on Full Retirement Age (FRA). For those born between 1943 and 1954, FRA is 66 years and 0 months. For those born in 1960 or later, FRA is 67 with those born between 1955 and 1960 falling in the middle by months. If you decide to receive benefits at any other time (either before or after FRA), your benefit may decrease or increase. Bottom line is that filing for benefits later means a larger benefit.

When Should I Claim My Social Security Benefits?

Generally, there are no simple answers. There are a lot of different factors and circumstances that can affect your decision, and what works for one person will not be the same for another. Social Security is specifically tailored to you and your family based on your work history and situation. Ultimately, it's important to learn as much as possible about claiming strategies, their benefits and any expected consequences if you want to maximize your own Social Security benefit.

Will Social Security Be Enough?

Although Social Security generally provides an income stream that you can't outlive, will it provide enough income? Maybe not. Having other income sources may not only be smart, but it may be necessary! Pensions, savings, retirement plans and work will likely be needed to supplement Social Security income.

A smart step may be to consider ways to close the gap. Consider IRAs and non-qualified annuities — both deferred and immediate — for lifetime needs, and life insurance for your surviving spouse and/or dependents.

For further insight on Social Security, talk to a financial professional or your local Social Security Administration office, or visit the Social Security website at www.ssa.gov. With a thoughtful and comprehensive retirement plan, you can feel confident about the steps you need to take to design your retirement to be both financially secure and personally rewarding.