Darcy Bergen |
According to Darcy Bergen, while many people think they will get two benefits upon retirement, this is not the case. When you consider your wage history, the higher earning spouse will receive a higher survivor benefit when you die. Moreover, if your spouse dies young, your surviving spouse may have a lower income than your spouse did. Thus, proper social security planning is important to protect your spouse's benefits. This article will discuss some important tips on social security planning.
Social security planning is an essential part of retirement financial preparation, but there are also other aspects of this complex process. First, you should determine the age of full retirement and the consequences of applying early. You should also understand the rules and conditions for spousal or divorced-spouse benefits, including the annual earnings test. The best way to get a clearer picture is to speak with an expert in this field. A financial advisor can help you make decisions based on your needs. It is important to keep in mind that the standard Social Security statement projects your benefits based on your projected earnings. Thus, not stopping or starting work before your full retirement age may reduce your future benefits. By default, projected statements assume continued work. If you stop or delay your retirement, you will receive a lower actual benefit than the one projected. Then, you should consider the impact of federal income taxation on your Social Security benefits. This tax will be deducted from your Social Security benefits once you reach full retirement age. When applying for Social Security, it is best to review all the factors that will affect your benefits. Among them, your life expectancy, physical health, plans for how long you plan to work, and your spouse's needs. Incorrect planning can result in the wrong strategy. If you want to maximize your benefits, you should carefully consider your life expectancy. Once you reach the full retirement age, you should consider claiming spousal benefits or survivor benefits as early as possible. Darcy Bergen thinks that if your spouse has already retired, it would be best to postpone retirement until after you reach full retirement age. While a higher monthly benefit might make you want to take the money sooner, the cost of living adjustments will make it worth your while to wait. If you plan ahead, Social Security planning will help you to take advantage of the benefits you can receive later. If you can't live off of your retirement savings, it may be better to postpone retirement until you are 70 years old. To calculate the ideal age to begin Social Security benefits, you can use a break-even calculator. This will give you a rough idea of the amount you can expect to receive when you turn 65. You can also use this tool to see how much money you can expect in retirement if you work until you reach 70. If you are planning on continuing to work, consider the timing of retirement as this will affect your benefits. Once you retire, you will want to continue working if possible, but you should consider the break-even age first to determine how much you can save. It is also important to consider your age at which you intend to claim benefits. If you are younger than full retirement age, your benefits will be reduced, but they will be larger for the rest of your life. The table below shows the impact of claiming early Social Security benefits. For this example, we assumed that the woman would have reached full retirement age at 65. If she had started collecting her benefit at 70, it would have taken her nearly 80 years to reach break-even. The best time to claim social security benefits is during your prime earning years. By claiming benefits early, you can delay the effects of inflation. While you are still earning income, the benefits are reduced by 6.66%/year. This reduction is called the actuarial reduction. On the other hand, claiming later will result in higher benefits because you have earned delayed retirement credits. If you are able to work beyond full retirement age, you should do so to maximize your benefits. Darcy Bergen believes that the Social Security Administration's benefits projections may not match the benefits that you actually receive. Early retirement can significantly reduce your benefits by 5% to 10%. But the impact is different for everyone. In extreme cases, early retirement can reduce benefits by more than 10%. The impact will depend on how much you earned recently and whether or not your earnings were higher than the long-term average. It also depends on whether you have been paying into the system for 35 years.
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