Taking Social Security Early Not the Best Option

Jane Young, CFP, EA

Jane Young, CFP, EA

The best time to take Social Security is a personal decision based on your financial situation, health, lifestyle, family longevity and when you stop working.  Social Security will provide you with the same total amount, if you live to the average life expectancy, regardless of when you take it.   The full retirement age for most people is between 66 and 67.  You can begin taking reduced benefits as early as 62 or you can wait and take an increased benefit as late as age 70.  If you begin at 62 your benefit is reduced by about 30%, if you take Social Security after your full retirement date your benefit will increase 8% per year until age 70.

You will probably benefit from taking Social Security at full retirement or later.  Unless you have a serious medical condition, there is a good chance you will live longer than the Social Security average life expectancy.  Social Security life expectancy tables are based on 2010 data and lag what can be reasonably expected.  They indicate a 65 year old male will live to around 84.3 and a 65 year old female will live to around 86.6.  Taking Social Security later is like buying longevity insurance.  It can provide you with more money later in life which can help put your mind at ease, if you are worried about out living your money.

If you are still working it can be especially detrimental to take Social Security before your full retirement age.  In 2015 you will lose $1 for every $2 earned over $15,720.   Once you reach full retirement age there is no limit to how much you can earn.   However, taxation of your Social Security benefit is based on your overall earnings.  If you take Social Security after you stop working a smaller portion of your benefit is likely to be taxable.  Additionally, if you continue to work and delay Social Security you may be able to increase your total Social Security benefit. The Social Security Administration annually recalculates benefits for recipients who are still working.

The decision on when to take Social Security is significantly impacted by your marital status and your spouses expected benefit.  If you have been married for at least ten years you have the option to take the greater of 50% of your spouse’s benefit or your full benefit. If you wait until your full retirement age you can start taking 50% of your spouse’s benefit, let your benefit grow, and switch back to your full benefit at age 70.   If you take the spousal benefit prior to your full retirement age you cannot switch back to your own benefit at a later date.  If you have been married for at least 10 years, and your spouse dies, you are eligible for the greater of your benefit or 100% of your spouse’s benefit.

More information about your Social Security benefit is available at www.ssa.gov.

Successful Habits of Wealthy People

Jane Young, CFP, EA

Jane Young, CFP, EA

Many believe that wealthy people are lucky or are born into their wealth but this myth is largely dispelled by research conducted by Thomas Corley.  Thomas Corley, CPA, CFP is president of Cerefice and Co. and the author of Rich Habits: The Daily Success Habits of Wealthy Individuals.  Over a five year period, Thomas Corley interviewed 233 millionaires and 128 people living in poverty.   Through these interviews he uncovered many daily activities that differentiated the two groups.  His research indicates that we have control over our destiny with our daily actions and habits.  It’s not always easy, but we can create our own luck by engaging in activities that will lead to greater financial success.  Over 85% of American Millionaires are self-made and are the first generation of wealth in their families.

Thomas Corley found that good habits are the foundation of success.  He discovered successful people have many good habits interspersed with a few bad habits where unsuccessful people have many bad habits with a few good habits.  Below are some of his findings on habits or daily activities practiced by successful people.

Successful people are goal oriented, 95% write down their goals and 81% maintain a To-Do list.  They don’t procrastinate and are focused on accomplishing things.   They are proactive, take control of their lives, and get things done.  They don’t let events or other people control their priorities.  Unsuccessful people are not goal oriented and can become easily distracted.  They don’t have goals to keep them grounded and focused on the end result.

Successful people eat healthy and exercise, 76% of the wealthy exercise aerobically 4 days per week. They rarely overindulge or binge, if they slip it’s a planned overindulgence on special occasions.  Eating well and exercise improves the immune system and energy levels which results in greater productivity.  Unsuccessful people have no consistent day to day control over their health.

Successful people place great value on relationships.  They are focused on others rather than themselves.  They understand the importance of networking and look for reasons to reach out to their contacts.  They don’t waste time in negative relationships with people who are only concerned about themselves.

Successful people engage in moderation.  They keep their thoughts and emotions in check and avoid obsession, addiction, extravagance, jealousy, envy and fanatical behavior.  People enjoy their company and feel comfortable being around them.  Unsuccessful people are more likely to live in conflict with little control over their lives.

Successful people are constantly engaged in self-improvement.  They watch very little TV and read for self-improvement.  They keep up with changes in their profession and devote time every day to better themselves.

Finally, successful people have a positive attitude.  They are happy, enthusiastic, confident and well balanced.  They feel empowered and take control of their lives rather than allowing outside forces to determine their destiny.  Have you taken control of your destiny?