What You (and Your Financial Advisor) Don’t Know about Collecting Social Security Could Literally Ruin Your Retirement

What You (and Your Financial Advisor) Don’t Know about Collecting Social Security Could Literally Ruin Your Retirement

The story usually goes something like this: You work hard all your life and contribute to Social Security with the expectation that, come retirement, you’ll hang up your work cloths and your monthly payments will begin supplementing your retirement lifestyle. That sounds right for the most part, except that the way you opt to collect your benefits could mean leaving thousands – if not hundreds of thousands – of dollars on the table.

If you are counting on receiving any kind of help from Social Security Administration employees, you are out of luck, because they are specifically prohibited from providing any form of financial advice. This means they can’t offer a shred of help when it comes to selecting the option that will give you and/or your family the maximum lifetime income. That may be hard to swallow, but it’s the reality.

Personally, I think what’s even worse is that an overwhelming number of so-called financial advisors don’t know enough to help their clients with strategies that could help boost their social security retirement income. That may sound like a strong statement, but how else would you account for the countless folks I meet, day in and day out, who are working with financial advisors, yet have no clue that they have better choices in terms of how they collect their Social Security?

Here’s a classic situation to support my point. Allison submitted this request through the “Ask Your Question” feature on our website. Before I go any further, let me take a moment to thank Allison and her parents for allowing me to share their story.

Allison’s Question:

I’m contacting you because my coworker believes that you may be able to help my parents come up with a better solution regarding their Social Security benefits. 

My dad, who’s now 66, took early Social Security retirement at 62.  My mom just turned 66, her full Social Security retirement age, but wants to wait until she’s 70 so that she can collect her highest benefit. However, she could use some extra income right now. Their financial advisor is suggesting that she start collecting now, since her work income will not reduce her benefits like it did for my dad. I’d really appreciate any assistance you can offer.

My Response to Allison’s Inquiry

First of all, thank you for contacting us about your parents’ situation.

I believe your mom is going to be pleased to hear about what is called Claim Now; Claim More Later, which is one of the little-known strategies for collecting Social Security that I cover in my complimentary special report “Secure YourFuture.” Because your mom has reached her full Social Security retirement age, she can immediately begin collecting benefits – here’s the key phrase – as your dad’s spouse.

This will allow her to receive half of your dad’s unreduced benefit amount, in spite of the fact that he began collecting his benefits early, at age 62. The other, even more powerful thing here is that your mom’s spousal benefit checks will not affect her own work record benefits. Therefore, she will continue to earn delayed retirement credits, just as she desires, until she’s age 70, at which time she will be able to switch over from collecting as a spouse to taking her own much higher benefits.

In  a nutshell, your mom can collect spousal benefits right now while her own benefit keeps growing. And by the way, her employment income will not cause any reduction in her benefits because she’s attained her full retirement age.

Allison’s mom would likely have missed out on collecting the spousal benefit to which she is entitled if she’d take her so-called financial advisor’s suggestion to start collecting her own benefits right now. Of course, it all ended well for her. But that’s because she found us! I wonder how many hard-working Americans out there are unknowingly walking away from Social Security money for which they qualify.

Does your financial advisor have the right knowledge and experience?

Download your very own copy of my complimentary Social Security strategy report. You can also contact us for suggestions about how you can get the most out of your retirement savings.

MYTH: Tax Planning is Necessary Only if You're Rich

Myth: Tax Planning is Necessary Only if You're Rich

Perhaps you, too, consider tax planning as something only “rich” retirees need to worry about – and although you’re working on it, you are not there just yet. Or maybe you think that because your retirement income will be lower than what you’re earning today, your tax bill will automatically decrease.

I must admit that, on the surface, that reasoning seems pretty logical. However, in reality these are complete myths when it comes to the way things work under the U.S. Tax Code. Really!

In fact, as tax season shifts into high gear, all you'll have to do is to pay close attention and you’ll notice that the bulk of retirees who feel clobbered by taxes do not consider themselves to be “rich” – although that’s admittedly a very loose term. Take social security benefits, for instance. Your checks begin to be taxable when your total taxable retirement income from all sources (including exempt municipal bonds) plus one-half of your social security benefits exceeds just $25,000 if you’re single or $32,000 if you’re married. You wouldn’t consider these to be thresholds that only the “rich” would be wise to plan around, would you?   

Yes, it’s true that our tax system is progressive in nature. But as I systematically lay out in my book 5 Mistakes Your Financial Advisor Is Making,  it’s equally true that your tax bill depends on your taxable income, not merely your gross or total income. As a result, even with a significant drop in your gross income, you could end up effectively paying more in taxes during retirement, as you generally tend to lose most of your significant deductions: mortgage interest (because your house is usually paid off or nearly so), dependent children (they are likely independent adults by the time you retire), and deductible contributions to retirement accounts (you’re drawing income, instead of contributing).  

On the other hand, the Tax Code also identifies some sources of retirement income as non-taxable. What you must understand about non-taxable income is that its size is irrelevant when it comes to your income tax bill. As a result, if Mary draws $250,000/year in non-taxable income, she’ll not owe even a penny of tax. All things being equal, Sarah, who draws just $30,000 in taxable income, will end up paying more in income tax. So we can say that when it comes to taxes, the term “rich” is directly related to taxable or non-taxable income.

Now it's time for some good news: Even if you are already retired, there are things you may be able to do to shift your income from the taxable column into the non-taxable column today – and also protect your income from possible future tax hikes. You can begin by scheduling a complementary, no-obligation appointment to talk with a Laser Financial Group wealth advisor about your options. 

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Want to talk with an experienced financial professional with dozens of real-world clients who are experiencing successful retirements? Want to learn how you can KEEP more of your retirement money, even if the market crashes? Call 877.656.9111 or visit LaserFG.com to talk with a retirement professional with a proven track record TODAY!

The Most Important Requirement to a Successful Retirement Is NOT What Most People Are Made to Believe

The Most Important Requirement to a Successful Retirement Is NOT What Most People Are Made to Believe

In my opinion, this is the million dollar question when it comes to retirement planning: What is THE ONE THING that must be present and without which your chances of succeeding in your retirement planning are slim to none? As a front-row eyewitness to the retirements of hundreds of folks for nearly two decades, I can tell you that it’s not simply saving a lot of money. 

Most people would agree, if not require, that a practitioner have actual real-life, hands-on expertise in a given field before we’d even consider hiring him or her. It makes perfect sense to want to ensure that a surgeon has already successfully operated on a few folks with your specific condition before agreeing to lie on their table. In fact, I wouldn’t even let someone remove my wisdom tooth unless they had a proven track record of doing just that.

Of course, that’s just common sense, right? So are you applying that same standard to one of the most critical aspects of your life – your retirement planning? Does your advisor have a proven track record that is backed by real-life success stories from folks just like you?

For some strange reason, it seems like many people unfortunately treat their retirement planning as though it were a routine procedure. Something for which they can afford to hire a less-skilled professional than they require in other equally import areas of their lives.

In reality, your ability to retire successfully requires more than just socking money away. And certainly more than radio or TV personalities who haven’t actually hit the trenches and cannot point to real-life results in their work.

Of course, you might get lucky. But would you hire an inexperienced surgeon, for example, and count on luck to be on your side?

Good food for thought!

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Want to talk with an experienced financial professional with dozens of real-world clients who are experiencing successful retirements? Want to learn how you can KEEP more of your retirement money, even if the market crashes? Call 877.656.9111 or visit LaserFG.com to talk with a retirement professional with a proven track record TODAY!