In Perspectives

There are few decisions at retirement more difficult than choosing the right strategy for collecting Social Security retirement benefits.  No matter their level of wealth, most of my clients start with a common goal:  “Maximize the amount I can collect over my lifetime”.  Developing a strategy to meet this goal would be easier if they could tell me exactly how long they will live, but their goal is not surprising.  Most of what we read on the topic and many of the available analytical tools are based on a similar goal.  However, I wonder if a better goal would be to develop a strategy that maximizes wealth over one’s lifetime?  For those with significant retirement resources outside of Social Security, I have found that the two goals are not always the same.

Those with few available resources at retirement usually need to take their benefits when their paycheck ends.  However, anyone who has significant financial resources at retirement faces a myriad of complicated options for collecting their benefits, each with a different impact on their other financial assets.  To ignore this impact would be a mistake, which is demonstrated by a recent client experience.

Tom and Judy worked their entire lives to build a successful business.  They faithfully paid in to Social Security and were interested in maximizing their “investment” at retirement.  Another advisor offered to analyze Tom and Judy’s collection options.  He utilized a commonly available Social Security analyzer focused on maximizing the aggregate lifetime benefit to develop a suggested plan.  Tom and Judy are both very healthy and have a long life expectancy, so it was not surprising that the analysis recommended putting off collecting their primary Social Security benefits until they were approximately 70 years of age.  When combined with certain steps designed to take advantage of various available spousal benefits, the suggested strategy did maximize Tom and Judy’s aggregate benefit over their lifetimes.  They were puzzled as to why these results were significantly different than anything we had ever discussed.

I informed them that my analysis focused on the fact that their living expenses would be taken entirely from their investments until they began collecting Social Security benefits.  This would force earlier than necessary taxation on IRA withdrawals and immediately begin reducing the amount of investments available for long term growth.  By ignoring the time value of money issues, the suggested strategy resulted in Tom and Judy exchanging growth oriented assets for slower growing Social Security benefits.  When they were included in a comprehensive analysis however, it became clear that there was a high likelihood Tom and Judy would create more wealth over the long haul by collecting Social Security benefits earlier in their retirement and allowing their investments to continue to grow.

Needless to say, Tom and Judy were thrilled with the analysis. Acknowledging that individual circumstances can vary widely, anyone with significant retirement resources should go beyond the common wisdom about Social Security collection and have an analysis performed that considers taxes and the time value of money.

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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