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What you don't know about Social Security could hurt you

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If you’re thinking that the friendly guy working at the Social Security office is your financial advisor…stop thinking that way.   It’s not that he doesn’t want to help you, it’s that he can’t.  Even as about 10,000 Americans reach retirement age each day, the Social Security office has seen massive cuts to its offices in terms of both employees and hours.    So, if you want any help from Social Security you owe it to yourself to get educated because only you know about all the variables in your life that determine when to file.  Those variables include previous marriages, late life children, your health and your spouse’s health, how long you plan to work, your income and your spouse’s income, where you plan to retire, and when your spouse plans to file for benefits to name just a few.

Here are some options for boning up on Social Security.

Read about Social Security claiming.  The easiest book I’ve found is Andy Landis’ Social Security: The Inside Story.  It’s entertaining, easy reading and covers the topic in-depth.  If a book-length look at the topic seems too much to chew on at first, Laurence Kotlikoff writes about Social Security every week for PBSMary Beth Franklin at Investment News also writes the occasional article on Social Security.  These writers can give you an idea about why claiming Social Security benefits can require much more work than the average American puts into it.

Check out a Social Security calculator.  As alluded to above, claiming benefits is complicated.  Social Security has a bare bones calculator on their website that can be useful for determining the size of your benefit but if you want to have an idea about when to claim, you’ll need something heftier.  AARP has a free one on their site.  As does T.Rowe Price and a whole lot of other people also have some skin in the game with free calculators including Laurence Kotlikoff.  Paying for a calculator is likely to provide better information but as with most things having to do with computers, it will depend strongly upon the information you put in. Some useful calculators that will cost you something include MaximizeMySocialSecurity started by Laurence Kotlikoff and with more muscle than his free one and SocialSecuritySolutions.

Hire a financial advisor.  All the hyperlinks should have given you some idea about just how complicated a topic Social Security is.  For a single person (no previous marriages of 10 or more years), determining when to claim Social Security is as basic as choosing to claim early and get a reduced benefit (which might be okay if you have no other choice or you expect to die early), claiming on full retirement age and getting full benefits or claiming at age 70 and getting delayed retirement credits.  For everyone else, you’ll need to do your homework and get the best help you can.  Over the span of your life, the difference can amount to tens of thousands of dollars.  Since even financial advisors don’t always know that there is more to Social Security than basic claiming, make sure you hire someone who truly understands the value of your Social Security benefit.  In this area, that would be Julie Price.

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