Two pieces of news provide a flicker of hope amid the doom and gloom.
By Cyril Tuohy
Nationwide Financial Retirement Institute, part of the Nationwide Mutual Insurance, has launched Social Security 360, a program designed to improve advisors’ understanding of when to begin taking Social Security.
Knowing when to time Social Security withdrawals is an art in itself, one that alone can require the services of a full-time financial advisor. Nationwide’s program allows advisors to generate custom reports that include claiming instructions, cash flows and income gaps.
David Giertz, president of distribution and sales for Nationwide, said in a news release that the tools available via Social Security 360 would help give advisors and their clients “a clear understanding of their options to identify a filing strategy” for the program.
Software algorithms compare the election strategies available to beneficiaries, be they married, single, divorced, widowed, working for the government or even beneficiaries who’ve already elected to collect their Social Security payments, the company also said.
Nationwide, citing LIMRA statistics, said only one-third of advisors offering retirement income planning strategies also make available Social Security-claiming strategies as part of their financial planning.
The Social Security Administration already provides information about when it’s best to begin taking withdrawals.
Knowing when to collect Social Security checks from the U.S. Treasury is a critical piece to structuring long-term retirement portfolios.
Drawing down a 401(k) account before collecting Social Security payments, for example, means that a retiree can delay Social Security withdrawals. The longer recipients delay their withdrawals, the higher their higher monthly government checks.
Delaying Social Security payments also affects the amount retirees pay in income taxes.
With as many as 10,000 baby boomers retiring every day, many are either starting to draw on their Social Security or thinking about when it’s best to do so.
For low and middle-income retirees, Social Security will provide a major source of income. Making the most of those government deposits will go a long way to helping retirees live a relatively comfortable life in retirement.
Social Security, signed into law by President Roosevelt in 1935, was designed to offer an income floor to the elderly and to retirees who had lost everything in the Great Depression.
The program, however, has grown in relative importance and is now part of a three-legged income stool that includes personal savings and pensions.
With the decline of private sector defined benefit plans and state and local governments cutting back on retirement benefits, Social Security has become a more important source for tens of millions of people.
Cyril Tuohy is a writer based in Pennsylvania. He has covered the financial services industry for more than 15 years. Cyril may be reached at firstname.lastname@example.org.
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