At Hill Investment Group, we’ve found that when a few clients ask similar questions, many more likely share the same curiosity. To better serve you, we’ll periodically feature this “Hey Hill” segment in our newsletter, addressing common client questions and explaining our perspective. To submit questions for future newsletters, email us at service@hillinvestmentgroup.com.

Hey Hill, should my Social Security income change how I invest?

Many investors underestimate how significantly Social Security can impact their financial plans. Rather than viewing it merely as a government benefit, think of Social Security as what it truly is—a guaranteed, inflation-adjusted income stream, similar to a bond within your portfolio.

This means your actual fixed-income allocation may be higher than you’ve realized. As a result, incorporating Social Security into your planning can allow you to take on more investment risk than initially assumed, potentially enhancing your portfolio’s long-term growth.

Clients often ask us:
– Should I reduce my stock exposure as I near retirement?
– How much investment risk is appropriate?
– How should I factor Social Security into my overall investment strategy?

Reframing Social Security as a reliable income source can help you feel more confident maintaining a higher equity allocation, improving your portfolio’s potential for growth over time.

Want to discuss how this concept applies specifically to you?

We’re here to help. Reach out at service@hillinvestmentgroup.com.

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.