By Dan Schulte, Vice President and Manager, Annuities and Insurance and
Theresa Fry, Senior Vice President and Manager, IRA and Retirement Plans

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If you are like most pre-retirees, you may be wondering: “When should I begin taking Social Security retirement benefits?”  Americans can begin receiving Social Security retirement benefits as early as age 62. However, beginning benefits at age 62 will result in receiving 25% less than what would be received at full retirement age (between age 66 or 67, depending on the year you were born).   In addition, waiting to begin taking Social Security benefits past your full retirement age provides higher monthly benefits due to the 8% percent per year delayed retirement credit.  Delaying Social Security can also provide more lifetime income for your surviving spouse (after your death) as well as additional inflation protection.

If you are concerned about living a long time and funding a long retirement, the decision to delay Social Security can be a highly beneficial strategy, but without the kind of market risk involved in investing in equities.  Of course, there is a downside of delaying Social Security retirement benefits.  If you should die before expected, you may not receive the benefits you had hoped for, or possibly no retirement benefits at all.

When thinking about delaying Social Security, issues to consider may include:

  • Current liquidity needs
  • Family longevity history and current health status
  • Other sources of retirement income
  • Anticipated future needs and obligations
  • Whether you intend to work and earn income in retirement

If you like the idea of delaying Social Security to receive the higher benefit amount, but are looking for income to replace wages that were lost after retirement, you may want to consider investing in period certain immediate annuity.  A period certain immediate annuity pays a temporary income stream over a pre-determined period of years until Social Security “kicks in”.  Period certain immediate annuities are issued by insurance companies, provide guaranteed income*, and can be designed to replicate the Social Security payments that would have been received between ages 62 and 70. This annuity income can help you enjoy retirement while you are still in your 60s, while increasing the Social Security benefits you will receive later.  With this strategy, when the immediate annuity payments end at age 70 and you begin collecting Social Security, you will have a larger Social Security benefit amount for the rest of your life. Contact your Benjamin F. Edwards financial advisor to discuss strategies for receiving Social Security and annuity options to generate a guaranteed* income stream.

*All guarantees subject to the claims paying ability of the issuing carrier.