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The ProVise Advisor Team
SOCIAL SECURITY…GETTING ALL THAT YOU DESERVE
Unfortunately, too many people just sign up for Social
Security without realizing how many different alternatives
exist. Even worse the Social Security Administration often
gives faulty advice which can cost tens of thousands of dollars
or more over a recipient’s lifetime. In a survey by Nationwide
in 2019 92% of those surveyed were unable to identify how to
maximize the benefit to which they were entitled.
Your Social Security benefit is calculated by taking your 35
highest years of earned income with an adjustment for inflation.
However, you only get credit for 90% of your Average Indexed
Monthly Earnings (AIME) on the first $926, 32% of income
from $926 to $5,583, and 15% of everything above $5,583. These
thresholds are adjusted for inflation periodically. If you think
this is complicated, deciding how to get the maximum benefit
is even more complicated. (see below)
According to Social Security Administration, this year the
average monthly benefit is $1,503 and is paid to approximately
45 million retirees. Nine out of ten individuals over the age of
65 have some Social Security benefit with it representing at least
50% or more of the income for 70% of individuals and 50% for
those that are married. For those that are fortunate enough to be
high wage earners the maximum benefit in 2020 is $3,011 at Full
Retirement Age (FRA) which is age 66 and 8 months currently.
You can start as early as age 62, but if you do, then your
benefit is reduced by 0.56% for each of the first 36 months and
0.42% for every month over that if you take Social Security
prior to FRA. A $1000 benefit at FRA is only $717 at age 62.
Additionally, if you are working and take the benefit before
FRA and your earned income exceeds $18,240 in 2020, then your
benefit is reduced dollar for dollar above this amount. There is
About ProVise Management Group, LLC: ProVise is a financial planning and investment management firm registered with the Securities and Exchange
Commission (SEC) and has been in business since 1986. Our 15 professional advisors serve approximately 1100 clients in over 30 states. As of 6/30/2020 we
were managing approximately $1.45 billion for our individual, corporate, not-for-profit and 401k retirement plans. Please visit our website at: provise.com.
Investment Advisory Services offered through ProVise Management Group, LLC. The information herein is general and educational in nature and should
not be considered legal or tax advice. Tax laws and regulations are complex and are subject to change.
90 TAMPA BAY MAGAZINE | SEPTEMBER/OCTOBER 2020
no penalty once you reach FRA if you continue working. Then
why would you even think about taking it early? You need
the income, or you are in poor health and have a shorten life
expectancy are two very good reasons.
On the other side of FRA, you might consider delaying
until age 70. For each month after FRA you wait, your benefit
increases by 0.66%. Thus, a $1000 benefit at FRA could become
$1,266. If you do not need the income at FRA either because
you are still working or have adequate cash flow without Social
Security, and especially if you anticipate a long life expectancy,
then delaying might make sense. The maximum benefit in 2020
at age 70 is $3,790, or $45,480 for the year.
If you are married to the same person for 10 years or more,
you can take either 100% of your benefit, or 50% of your
spouse’s benefit whichever is higher. Thus, the maximum
benefit for two high wage earners is about $91,000, but with
only one spouse at the maximum it is still about $62,000. The
100/50% option still applies, even if you are no longer married,
as long as you were married for ten years. Should the spouse
with the higher benefit die, then the surviving spouse will get
the higher benefit but lose their own benefit.
There is not enough room to delineate all of the alternatives
and permutations. While the combinations are not endless, it
can lead to over 500 ways to take Social Security according
to bankrate.com. It is not something you want to do on your
own. Without good software to guide you, you can be costing
yourself a lot of money in retirement. Would you like to know
your best alternative? For the first 25 people who call our
office (ask for Beatrice or Oscar), we will provide you with a
complimentary report.
/provise.com
/bankrate.com