The Credit Professional Winter 2018 Dec_2018_magazine | Page 4

Maximizing Social Security
Retirement Benefits
By Judy Tan
Gassman Financial Group
The importance of Social
Security cannot be overstated.
The program provides
approximately 60% of America’s
seniors with half of their
monthly retirement income,
and for a third of recipients it
comprises over 90% of
their income.
Despite this heavy reliance,
less than 5% of seniors avail
themselves of strategies
designed to maximize their
lifetime income and relieve the
burden of poverty in old age.
And despite well publicized
concerns about the future
solvency of the program, Social
Security is by no means broke.
The program is expected to
remain fully solvent until 2034
and, even assuming that no
corrective legislative action is
taken, will maintain sufficient
funding to honor approximately
80% of more distant benefits.
Given the importance of the
program to America’s seniors,
it will continue to play an
important role in retirement
income planning.
How Benefits
Are Calculated
Social Security retirement
benefits are calculated using
your highest 35 years of
earnings—limited to the
maximum earnings subject to
Social Security tax in that year.
An adjustment is made to
reflect changes in average
wages, so older wages are
effectively increased
for inflation.
For those with more than 35
years of wages, the lowest wage
years are removed, while zeros
are used in the calculation for
those with a work history
spanning less than 35 years.
The resulting calculation
determines your primary
insurance amount (PIA), or
the amount you will receive
in retirement benefits
upon attaining your full
retirement age.
Patience Really Is a Virtue
Seniors can begin taking their
Social Security retirement
benefits as early as age 62, or
may defer collection until as
late as age 70. The benefits of
deferring are compelling, yet
close to two-thirds of seniors
begin their benefits before
reaching their full retirement
age. A mere 10 percent begin
their benefits after.
Continued on page 4
The Credit Professional
3
December 2018