SOCIAL SECURITY PLANNING
Over the next 18 years, about 77 million baby boomers will turn 62 at the rate of 10,000 per day. Sixty-two is a magic number age for claiming early Social Security benefits. The lifetime value of Social Security is far greater than most people realize. Under the current formula, a person who starts out receiving the maximum monthly benefits of $2,346 in 2011 will receive a total of $320K if he or she will live another 10 years. If the life expectancy will increase from 10 to 20 or even 30 years, then those numbers will increase to $740K or $1.3M respectively.
These amounts can be increased or decreased by the decisions made very early in the process—long before boomers realize the lifetime impact of their decisions. A baby-boomer, who claims a reduced benefit at age 62, could end up leaving hundreds of thousands of dollars on the table if he or she lives well into their 90s.
The bottom line is that Social Security is very complex and there are few rules of thumb that apply not only to baby-boomers but to EVERYONE, regardless of the age. Most boomers and people in general don’t have the tools or knowledge to do this on their own. Therefore, they need an advisor who possess this highly specialized knowledge, help them to analyze the individual situation and do the financial projections that access the impact of various what-if scenarios.
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