Briefcase Study

December 2014: Briefcase Study

In Briefcase Study, December 2014, Income Planning, Social Security by Adam Cufr

Each issue of The Steward will include a brief case study. In it, strategies will be highlighted that we utilize in solving problems and creating opportunities for our clients. We hope you’ll enjoy this case study and find some wisdom in it that may help you in your own planning.

When should we file for our Social Security benefits?

I don’t want to spoil the ending, but if you would allow me to offer the answer first, it will save you some suspense, and offer a bit of clarity as you read on. When should you file for Social Security benefits? It depends… It just depends.

Dave recently hopped in the car with one of our clients to join her at the local Social Security office to learn about her Social Security benefits. Not only did Dave help her ask the right questions, he also was able to use the information to build a more accurate retirement plan for the client. Social Security decisions involve many intricate variables, and it can be tough to make sure you see the big picture clearly. If you’re wondering, yes, Dave will be happy to join you on your next visit to the Social Security office … Just ask him nicely.

Back to the question: When should you file? Well, it helps to understand that each year you wait to file for your benefits, the paychecks grow around 8%. Thus, the longer you wait, the bigger your income from Social Security every remaining year of your life. Additionally, your paychecks usually receive an annual increase from the Cost of Living Adjustment (COLA).

So how does one evaluate when to file for Social Security, whether at early retirement age of 62, full retirement age (FRA), or at age 70, the age at which benefits cease growing? As you can imagine, there are a number of factors that contribute to the right answer for you and your spouse, if married.

First is the question of how long you’ll live. Since that is a difficult question to answer, we’ll do our best to consider your longevity based on family history, current health, and some actuary tables.

Next, we consider the rate of return you expect to achieve with your other assets. Why does that matter? If you intend to delay claiming your Social Security Benefits, you’ll have to use your other savings and investments to provide you the income you’ll need.

Simply put, if you believe that you are assured an 8% or greater rate of return from your investments, net after fees, then you may want to consider taking Social Security sooner than later and leave your investments to grow.

But wait, don’t forget the Cost of Living Adjustment increase on your Social Security checks. To be safe, you’d better be assured of a 10% or greater return on your other investments if you plan to file for Social Security early.

Also, married folks ought to think through their spouse’s Social Security benefits as well. If the spouse who has lower benefits outlives the higher benefit spouse, they will continue to receive bigger paychecks for their lives if their spouse waited to receive theirs.

Are you exhausted yet?

There are so many variables to consider when making this decision that many retirees simply take the money. A bird in the hand is better than two in the bush, right? (What does that even mean?) If you’re struggling to make sense of this (or stay awake), you’re not alone. Rest assured, we have some really slick software that helps us make this decision with you. It allows us to input all of the variables and do some what-if analyses. I strongly consider that you schedule a time to sit down with us to evaluate your options.

The outcome of your choice could mean tens or hundreds of thousands of dollars to you, your spouse, and even the next generations if you do it right. Please don’t let “It depends” scare you away from taking control of a major asset that you’ve earned. Please contact us at or call our office today at (419) 931-0704 to arrange a discussion to learn your options.