Imagine owning an asset that has increased by 25% during the recent coronavirus pandemic. Now let me tell you a little secret: you probably already own it! I’m talking about Social Security benefits.

At Hill Investment Group, we help clients with all kinds of important decisions to optimize their portfolios. One of these decisions is when to collect Social Security benefits. The question is much more complicated than you might think. Some clients have seen six-figure differences in options after we run our analysis. Timing when to collect on Social Security is even more important today with interest rates near zero. If you are curious about how we do this analysis and are interested in what the answer might be for you, schedule a call here.

Recently, New York Times financial columnist, Jeff Sommer, wrote a piece arguing we should think of our social security as an annuity. Sommer argues it’s an annuity we all own that has skyrocketed in value – to the tune of $1 million for some. As many of you know, we generally advise AGAINST owning annuities of any type and better explain why this is different.

The key points:

• Social Security can be compared to annuities because similar to an annuity, Social Security provides a monthly guaranteed income for a specified period of time. 
• With low-interest rates, the income-producing power of other investments has dropped while the value of Social Security has held strong.
• Because of this, coupled with Social Security payments increasing with inflation, the effective value of the Social Security income stream has soared.
• As an added benefit over annuities, the US Government guarantees the payments, so it’s virtually risk-free, unlike a stock portfolio. 
• If you tried to purchase an annuity on the market with similar features, it would be an expensive annuity indeed. Example: for a high-income earner who delays claiming Social Security benefits until age 70, Sommer suggests an annuity providing comparable benefits might cost about $1 million today, an increase in the cost of about 25% from prior years.

 Be sure to check out his article here.

One of the services we provide for our clients is social security optimization. We like for you to get the maximum benefit from the system you’ve paid into for most of your life. For as much bad publicity as the Social Security Administration receives, it does oversee one of the few guaranteed programs backed by the federal government. Social security may not be the primary source of one’s income but it can provide a stable stream in retirement.

REMINDER: It is important to ensure your benefits reflect what you’ve earned over your working life.

In an attempt to reduce costs, the Social Security Administration has greatly curtailed the number of statements mailed each year and encourages workers to check their information online. In fact, for people under 60 the SSA no longer mails statements and only allows users to view their information online. We recommend that all individuals establish an online account and check it annually. This allows you to see your estimated benefits at different ages as well as provides an opportunity to safeguard against identity theft and fraud by checking your earnings history.

To review your Social Security information, go to www.ssa.gov to set up your personal account.

On November 2, 2015, Congress passed new legislation governing social security benefits. We’ll be updating our recommendations as you near your social security start date, but here’s an overview of the changes:

• FILE AND SUSPEND GOES AWAY. This advanced technique—primarily utilized by professionals and their clients—allowed you to provide benefits to your spouse while you suspend and watch your own benefits continue to grow. This feature will be eliminated except for those individuals who have already filed and suspended or those who turn 66 before 5/1/16.
• RESTRICTED APPLICATIONS GO AWAY. Previously you could withdraw spousal benefits while delaying your own until age 70. Those under age 62 as of 12/31/15 will no longer be eligible for this benefit.
• NO CHANGE – At Full Retirement Age (66-67), the spouse with lower social security benefits will still be eligible for a minimum of 50% of their spouse’s benefits.
• NO CHANGE – If you delay collecting social security after your full retirement age, your benefits still increase by 8% per year until age 70.