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Friday, October 31, 2014

Social Security Won't Be There For Us

I sound like a broken record to myself but just to be sure, this blog title is a MYTH.

As long as we can keep the crazy people from privatizing it, Social Security- by any measure -will be solvent for decades.  And with minor tweaking that solvency could approach permanence (as much as anything is "permanent").  There is absolutely no need to decrease benefits nor increase retirement ages.

It is upon that evidence-based foundation that Social Security Optimization is essential.  In my retirement classes I drive home the need for long-term, holistic retirement planning.  Most clients I meet with have not realized Social Security is their single most valuable retirement asset.  Based on the clients I've met with so far this year, their average lifetime benefit is:
  • $950,458.   
Fortunately, with individually crafted benefit timing, I increased the average benefit to
  • $1,149,341 a 17% increase, or, 
  • $198,883 average per client/couple.

That's definitely worth a few hundred dollars in planning fees and a couple of meetings, isn't it?  But sadly, without a formal planning process 45% of men and 50% of women select the strategy that pays the lower amount!  They're leaving $198,000 on the table.

Here are the gross numbers for all new clients this year as shown in the graph:
  1. Total pre-planning benefits:  $28,513,741
  2. Total post-planning benefits: $34,480,241
  3. Total Increased Lifetime Income:  $5,966,500
I can't express how good that feels to me.  Not bad for a year's work.  And I only charge 10% of the gain as a fee.  Just kidding.  I wish I could.  Here is the more important question:  What if you could derive similar or better enhancements for the rest of your retirement assets?  

The above statistics are a basic summary and do not reflect the complexity of coordinating Social Security with other income streams and assets such as pensions, personal and company retirement funds, and estate planning wishes.  Holistic planning must include health factors, spousal benefits,  longevity estimates, unique budget requirements, future lump sum expenses & income, taxes and fees.  A plan must at the very least answer all of the following questions:

  1. What's the most I can lose in one year?
  2. What's the most I can spend?
  3. What's the most I can leave to my heirs?

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