Plan According to Social Security Rules

September 16, 2008
Scott J. Kleiman

Physician's Money Digest, April15 2003, Volume 10, Issue 7

I n a recent survey, 80% ofAmerican workers either incorrectlyguessed or didn'tknow their eligibility age for fullSocial Security retirement benefits.This may just be the right time totake a fresh look at your SocialSecurity distribution plans.

YOUR SS STRATEGY

Determining the right strategy fordrawing on Social Security requirescareful planning and a healthy doseof number crunching, taking intoaccount your individual life expectancy,your full retirement age,the anticipated value of your assets atthe time of retirement, and what typeof return you can expect from yourportfolio. As you review your options,you may want to keep the followingconsiderations in mind:

• All Social Security distributionoptions are designed to provide youwith roughly the same amount inoverall benefits, so choosing the bestoption for you means analyzing yourunique needs and financial situation.

• Your full retirement age dependson your birth year. For help indetermining the year in which youcan begin to receive full SocialSecurity retirement benefits, visit theSocial Security Administration's Website at www.ssa.gov/retirement.

• Delaying Social Security bene-fit payments means you will have torely on your savings to fund the earlyyears of retirement. This could shrinkyour portfolio and reduce the returnsyou can expect in later years. On theother hand, if you claim benefits earlyand unexpectedly outlast your savings,you may end up living on areduced Social Security benefit forthe rest of your life.

• If you plan to continue working,you no longer need to wait untilage 70 to receive full Social Securitybenefits. You can begin receivingSocial Security benefits as soon asyou reach your full retirement age.

EARLY RETIREMENT

If you want to retire early, you canbegin to receive Social Security bene-fits at age 62, but doing so will reduceyour monthly benefit by as much as30%.You can also delay taking bene-fit payments until age 70 if you wantto receive a larger benefit later in life.For example, a person who couldexpect to receive $1000 a monthfrom Social Security at full retirementage (ie, age 66) could choose from thefollowing options: begin taking bene-fit payments at age 62 and receive areduced benefit of $750 a month,begin taking benefit payments at age66 and receive $1000 a month, or,instead, begin taking benefit paymentsat age 70 and receive anincreased benefit of $1320 a month.

Although many of the laws governingSocial Security distributionswere enacted 20 years ago, theyremain a mystery to most retirement-mindedinvestors. Whatever yourretirement plans entail, be sure theytake into account all facets of the prevailingSocial Security legislation.

Scott J. Kleiman is an independentadvisor with Linsco/PrivateLedger, located in ElkinsPark, Pa. All securities offeredthrough Linsco/Private Ledger,member SIPC. Past performanceis no guarantee of future results.Theinformation presented is the opinion ofScott Kleiman and not that of Linsco/PrivateLedger. He welcomes questions or commentsat 800-242-1760 or scott.kleiman@lpl.com.