By Steven Buttice, Founder and President
Claiming Social Security:
Many people do not know that you can control Social Security retirement income. You can claim Social Security as young as age 62 and must claim it by age 70. Most people just claim it at their full retirement age of about age 66 without a second thought. So, why would people want to start Social Security at age 62, 66 or 70, and what is the difference?
Every year that you wait to claim Social Security benefits, your annual payouts will increase by 8 percent. Waiting until you’re 70 will give you 32 percent more in benefits than if you took them at age 66, and you can receive 76 percent more than taking them at age 62. If you can afford to delay benefits until age 70 and if you live past age 82, you will receive more in lifetime income from Social Security than if you had started at full retirement age of approximately 66.
You should consider your health and your life expectancy. Be realistic about your health. If you have one or more chronic diseases, your life expectancy may be shortened. Similarly, your heredity very well may play a factor in the number of years you will live. Therefore, in some cases, it may be better to claim Social Security at age 62, but if you are still working and earning over $15,480 in 2014, your Social Security may be decreased $1 for every $2 you earn. See SSA.gov for details.
It is wise to talk with a financial planner to gather information about when to claim your Social Security.
It always happens to the other guy:
According to an Ohio State University study done in 2012, women have a 52 percent chance of going into a nursing home. Men have a 33 percent chance. Assisted living also accounts for a high percentage of people. The bottom line is that if you live long enough, you may deplete your assets. Not many people can afford $7,500 a month for a nursing home for three years. Therefore, it is prudent to re-evaluate your life insurance as you approach age 65-70. If you need to go on public aid, the state allows a single person to keep $2,000 of total assets. If you own a life insurance policy with more than $2,000 cash value, you could end up losing that policy.
You have options: in some cases, you can keep your current life insurance by taking a reduced paid up option. It is important that you see a professional financial planner or life insurance agent before considering any changes with your life insurance policy.
A good option to life insurance in your golden years is to prepay funeral expenses. This can be done several different ways, but a prepaid funeral plan can never be taken from you by Medicaid or any creditors if set up properly. These plans are commonly funeral trusts and can be up to $15,000 in Illinois. Any money left in the plan is payable to a named beneficiary after all other funeral costs have been paid. In addition, pre-paid funeral planning relieves your family of the financial and emotional burden.
The best plan for taking Social Security or use of a Medicaid/creditor exempt funeral plan doesn’t just happen. You must plan for the best outcome.
For more information, contact Living By Your Design, Inc., focusing on the issues of older Americans: legal, financial, free guidance for residential placement and health care issues. Call 309-285-8088 or visit online www.LivingByYourDesignInc.com. They are located at 809 W. Detweiller Dr., Peoria, IL 61615.