In Perspectives

Claiming Social Security

Social Security started as a federal program during The Great Depression to provide an income base to retirees, to be used in conjunction with savings and pensions.  The program has morphed overtime with the addition of disability benefits, spousal benefits, and survivor benefits.  Combined with the decline in the number of funded pensions, retirees have come to rely heavily on Social Security as a guaranteed source of retirement income.  Your Social Security benefit is calculated using your 35 highest years of earnings, adjusted for inflation, and your benefit amount is stated at your Full Retirement Age (“FRA”).  FRA was 65 for everyone until an amendment in 1983 and is now on a sliding scale, based on the year in which you were born.  Below is a shortened chart, starting with those who’s FRA is 66:

Year of Birth FRA
1943-1954 66
1955 66 and 2 months
1956 66 and 4 months
1957 66 and 6 months
1958 66 and 8 months
1959 66 and 10 months
1960 or later 67

You can start to collect your benefits before your FRA, as early as 62, at a reduced benefit amount and if you delay collecting past your FRA, as late as 70, you are rewarded with an increased benefit.  This reduction or increase from your benefits at full retirement age is calculated per month you file early or late so each month you can wait, you will have a higher benefit than the month before.  Once you file for Social Security benefits to begin, your monthly amount is locked in place for life (with the exception of a Cost of Living Adjustment or “COLA”).  See the chart below for how early or delayed claiming can impact your monthly benefit amount.  This chart assumes the full retirement age is 67.

Age % of Benefit
62 70
63 75
64 80
65 86.67
66 93.33
67 100
68 108
69 116
70 124

So, when should you file?  For some, it is a no brainer to claim early and for others, delayed claiming makes more sense.  There are a variety of factors that affect claiming Social Security benefits and each person’s situation is unique to them.  Although, a full analysis is beyond the scope of this blog post, below are a few considerations that may apply:

Health plays a large role in deciding when to file.  For people with poor health, delaying claiming in order to receive a higher monthly benefit may not make up for the months of reduced benefit that were forfeited so they may choose to claim early and start receiving their benefits as soon as they are eligible.

Some retirees lack sufficient other assets to bridge the gap between their retirement and FRA and need to collect early so their cashflow is not interrupted.  Those with assets sufficient to fund the retirement gap must determine whether they will be further ahead by liquidating their assets or collecting benefits.

Coordination of spousal benefits for married couples is a central focus for many, especially if each spouse qualifies for their own benefit and one spouse qualifies for a significantly higher amount.  It might make sense for the spouse who qualifies for the higher benefit to delay claiming until age 70 so they can have one spouse receiving the highest possible amount.  This can make a significant impact when one of the spouses passes away.

An often-overlooked factor in making the decision of when to claim is the retiree’s risk tolerance.  People that are averse to risk typically claim earlier as the current benefit is tangible.  It is not uncommon to hear concerns voiced regarding the Social Security program, as a whole; some believe the program will not exist in the future and some believe that changes will occur that would have a permanent, negative impact on their unclaimed benefits.

These are just a sample of common considerations in deciding when to file for Social Security benefits, however, each person, couple, and situation are unique.  Please consider including your financial advisor in the decision-making process when it comes to claiming your Social Security benefit.  Be on the lookout for a follow-up blog post with a deeper dive into Social Security benefits.

Danielle Parmenter, CFP®
Associate Wealth Planner

Legacy Trust and Your Right to Financial Privacy

At Legacy Trust we have established policies and practices that respect the financial privacy of all individuals who use our trust company. We believe it is critical to comply with the laws and regulations designed to secure your financial privacy. Your relationship with us as our client is very important to us, and we want you to understand our policies and practices about handling your information.

This Policy applies to you – This Policy applies to our relationships with individual clients who inquire about or obtain products or services from us for personal, family and household purposes.

Strict security measures – We take the security of information very seriously. We have established security standards and procedures to prevent access to client information. We maintain physical, electronic and procedural safeguards to guard client information.

Limited employee access – We have established procedures to limit employee access to information to only those employees with a business reason for accessing such information. We educate our employees about the importance of confidentiality and client privacy. We take appropriate disciplinary measures to enforce employee responsibilities regarding client information.

Why we collect information – We collect information about you to:

  • accurately identify you;
  • protect and administer your records, accounts and funds;
  • help us design or improve our products and services;
  • understand your financial needs;
  • save you time when you apply for new products and services; offer you quality products and services; and comply with certain laws and regulations;

We collect information – We collect and maintain your personal information so that we can provide investment management and other services to you. The types and categories of information that we collect and maintain about you include:

  • Information we receive from you to open an account or provide investment advice or other services to you (such as your home address, social security number, telephone, financial information and investment objectives).
  • Information that we generate to service your account or from our transactions with you (such as account statements and other financial information).
  • Information on your transactions with nonaffiliated third parties.

We have established procedures so that the financial information we collect is accurate, current and complete. We are committed to work with you to promptly correct any inaccurate information.

Our selective sharing of information – In order for us to provide investment management and other services to you, we do disclose your personal information in very limited instances, which include:

  • Disclosures to nonaffiliated companies as permitted by law, including those who help us service your account (such as providing account information to brokers and custodians).
  • Other limited disclosures as permitted by law, for example, required reports to government entities.

We do not share your information with third parties for marketing purposes. We do not sell your information.

Former clients – If you end your relationship with us, we will continue to adhere to the privacy policies and practices described in this notice.

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USA PATRIOT Act

Important Information About Procedures For Opening A New Account

To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify and record information that identifies each person who opens an account.

What this means for you: When you open an account, we will ask for your name, address, date of birth and other information that will allow us to identify you. We may also ask to see your driver’s license or other identifying documents.

We apologize for any inconvenience this may cause; however, federal law prohibits us from waiving these requirements.

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