Broker Check

Securing a Sound Social Security Strategy

The Situation

The Situation

Bob and Sally were planning to retire in the next few months and the big question on their minds was, “how do we handle our Social Security benefits?” Having contributed to the system for years, they knew it was their turn to collect and they were anxious to do so. However, they believed there could be a benefit to deferring their start dates—they just weren’t sure if waiting was right for them.

A neighbor informed Bob and Sally of a Social Security webinar offered by NestEgg Advisors and hosted by their local public library. They decided to attend and, like many other attendees, took advantage of the complimentary follow-up consultation offered by NestEgg.

The Solution

The Solution

Bob, currently 64 and in good health, had a primary insurance amount of $3,200. This is the amount he would be entitled to collect should he file at his full retirement age of 66 and 6 months. His benefit should he file at the age of 64 was a lower amount of $2,700. Sally, 62 and also in good health, had a PIA of $1,300 and a lower current benefit of $900 at her age.

With these details in mind, we advised Bob to defer claiming his benefit until age 70. Because of Social Security’s 8% delayed credits, this would increase Bob’s monthly benefit to $4,600, an increase of $1,900 per month or $23,000 per year. Sally could also earn delayed credits, but the increase to her benefit would be significantly less since her PIA is as well.

If the couple lives well into their 80’s or 90’s, Bob’s higher benefit will be enjoyed by both of them. However, even if one spouse predeceases the other, the surviving spouse will continue to collect this higher monthly benefit of $4,600 or roughly $55,000 per year. As long as one spouse lives beyond Bob’s breakeven age of 79, this claiming strategy increases cumulative withdrawals over their lifetimes.

We also explained to Sally that she could also defer until age 70, which would increase her benefit, but she was reluctant. She felt that she and Bob could enjoy her benefit now, especially since they were healthy and interested in traveling. Sally, therefore, decided to claim her monthly benefit of $900 at 62. Once Sally is 68, Bob will be 70 and will begin to collect his benefit with delayed credits. At that point, Sally will switch from her own benefit to a spousal benefit based on Bob’s work record. Her new spousal benefit will be about $1,400 per month, representing a $500 per month increase in her benefit.



Bob and Sally were pleased with the presented plan because it allowed them to: 

Maximize Bob’s retirement benefits.

Provide the highest possible survivor benefit for Sally.

Provide an immediate current benefit (i.e. Sally’s retirement benefit).

Give Sally the opportunity to switch to a higher spousal benefit.

Provide substantially higher cumulative withdrawals over their lifetimes.

Reduce their income taxes.

This plan also has the flexibility to be modified if Bob and Sally's circumstances change prior to Bob turning 70. Building a relationship with NestEgg will provide long-term financial planning, investment management, tax reduction planning and continued coordination of their Social Security benefits into their overall retirement plan.

Important Disclosure

Fact patterns have been modified and fictitious names have been used. The Case Study is designed to illustrate how we may provide services to our clients, but these services may not be suitable for you. There is no assurance that NestEgg may be able to help any client achieve the same or similar results. The Case Study should not be construed by a client or prospective client as a guarantee that he/she will experience a certain level of results or satisfaction if NestEgg is engaged, or continues to be engaged, to provide financial planning services. Projections and retirement forecasts presented in the Case Study are not guaranteed and may not be indicative of future results.