Of course, you don’t intend to leave any money on the table when it comes to, of all things, collecting your Social Security benefits. Who would? But are you certain that your current plan to collect your benefits is the way that will maximize yours and your family’s lifetime checks?
You shouldn’t count on the Social Security Administration to help you determine that, because it’s not going to happen. Under Procedure GN 00203.004 of the Social Security Administration’s Operations Manual, employees are specifically prohibited from rendering any advice. Period. In fact, they cannot even ask you what the rules term “leading questions; i.e., worded in such a way as to suggest the proper or desired answer.”
Generally, when you submit an application, Social Security considers your pool of eligible benefits and pays you the highest amount. However, in many instances, this very approach can cause you to end up leaving some money on the table.
Let me explain my point using my recent encounter with Dan and his lovely wife Kelly, who came in to seek a second opinion about some changes to their IRAs that their financial advisor was proposing. Dan, who had just turned 70, retired four years ago and is collecting about $2,000/month in Social Security retirement benefits. On the other hand, Kelly, who is now 68, still works full time because she plans to begin drawing her highest possible Social Security of a little over $2,900/month when she turns 70. The couple made this decision a couple years ago with the complete blessing of their financial advisor, after personally visiting and speaking with a Social Security representative. In that encounter, Kelly’s options came down to either begin collecting about $2,100 now, or wait until she turns 70 to collect $2,900 plus.
Although things may sound pretty normal so far, here’s the problem. Kelly (and by extension Dan) is literally leaving $1,000/month ($12,000 a year) in unclaimed benefits behind! Under the rules, when Kelly reached her full retirement age of 66, she became eligible to receive half of Dan’s $2,000/month as a spousal benefit, and she’s allowed to specifically restrict her application to this spousal benefit only – without impacting her ability to collect $2,900/month at age 70 or Dan’s current benefit in any way. Basically, she can collect $1,000/month from age 66 through 70, while waiting for her own benefit to max out at $2,900/month. Meanwhile, Dan will keep collecting his checks, too.
Why didn’t Dan and Kelly’s long-time financial advisor tell them about this? My guess is that their advisor, like so many out there, simply doesn’t know. How else could Kelly have been advised to miss out on collecting $1,000/month for the past two years? The other question is why the Social Security employee Kelly spoke with didn’t tell her, either? Remember from above that Social Security employees are prohibited from offering advice. They are supposed to take your application and point you in the direction of the highest benefit you qualify for. And at that time, Kelly qualified for either $2,100/month in retirement benefits or $1,000/month in spousal benefits, but because the $1,000/month wasn’t the higher of the two, it fell off the radar, so to speak.
You can see how things can easily get rather tricky. If not for a chance encounter with my firm, this couple would still be leaving $1,000/month on the table today, going through life without even knowing that they’d done so. Are you really sure that the actions you and/or your financial advisor are pursuing will produce the maximum results for your retirement? Come in for an overview of not only your Social Security options, but also your general retirement outlook so we can help you uncover any issues that others may have glossed over. Call 877.656.9111 or visit LaserFG.com to schedule your meeting right now.