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Social Security and Coronavirus

September 01, 2020

Because we specialize in retirement income planning within the broad scope of comprehensive financial planning that includes tax planning, insurance planning, investments, financial planning, and estate planning, it is crucial that we understand Social Security. With some rare exceptions like public sector employees who did not pay into the Social Security system, Social Security serves as foundation and cornerstone of most folks retirement income plan.

The reason for that is that it is guaranteed as long as we are living and has cost of living adjustments that go with it. Additionally, there are survivor options so that if something happens to us and our spouse has a lower benefit, they will get their own benefit along with the difference between ours and theirs. Essentially, when one spouse passes away, the survivor gets the higher of the two Social Security benefits.

We study Social Security continuously. One of the biggest questions we often hear is: Will it be around with all the Government Debt and projections that fund will not be able to support 100% of benefits? This is something we talk a lot about with clients and beyond scope of this communication. We will talk about it with future communication or in the meantime, please reach out to us. Our financial professional team is well versed in this.

In the meantime, please read the following article. There are two parts. The first part was talking about how Social Security is still maintaining claims even during Coronavirus. The second part really has some meat and considerations on claiming Social Security.

One of the biggest ones is claiming strategies which is a big decision. There is no right answer for everyone. Every case for individual and couple is unique to your situation. Do I claim as early as possible or do I wait until age 70? The decision to wait really comes down to longevity. The best way to think about the decision is that the decision to wait is really about longevity and inflation protection. If we think we or our spouse have high probability of having a long life, most likely the spouse that had the higher earnings history will want to wait as long as they can? The lower earning spouse usually can take their benefit as early as possible if the concern is wanting to get benefit early.

Let us know if you have any questions. Social Security is that first layer of the foundation for most folks retirement income plan. Then, we layer pension benefits and passive income you get from investments, real estate, sale of business, or other items.

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