Contact

News & Insights

TOP TIPS – Crunch the Social Security Numbers and Play the Long Game

Calculate your full retirement age

The Social Security Administration (SSA) offers an online retirement calculator that allows you to work out your predicted life expectancy, your full retirement age, the likely value of your retirement benefits and more.

By using this calculator you will see that the longer you delay taking payment, the greater the value of your monthly benefit. However, this does not mean that delaying payment is always the best option; this will ultimately depend on various factors including how long you live, your tax situation and whether you take spousal benefits.

There can be no guarantee that your decision will prove to be the correct one. However, by undertaking a break-even analysis you can gain some idea of the best option for you.

For example, if your full entitlement at age 66 is $2,000 per month and you choose to start taking your benefits early, at age 62, payments will be reduced by 25%, so you would collect $1,500 per month. If you then live to beyond your 77th birthday you will collect less in total Social Security benefits than if you had waited until your 66th birthday to collect the full £2,000 per month. However, if you don’t live that long, it would have been better to start drawing benefit earlier. Your claiming strategy should be based on your unique personal circumstances.

Play the long game

The conundrum faced by those advising Social Security claimants on when to claim is a familiar one to financial advisers: how do you get clients to focus on their long-term retirement planning strategy rather than short-term outcomes.

It was recently reported that Retirement Research Consortium trialled thirteen different strategies designed to encourage older workers to delay payment with a view to receiving a larger overall Social Security check.*

The two most successful trials shared one trait: rather than retirement planners being bombarded with financial information they were instead asked to personally reflect on tables illustrating how much they would receive from their Social Security for every year after 62 they chose to delay. Only once this process was complete were they then asked to come up with reasons why it was better to draw benefits earlier.*

It seemed that this process had the effect of preventing the retirement planners from giving disproportionate priority to their short-term situation, with those who undertook the trials saying they would draw their Social Security 10 months later than those in the control group. *

Make Social Security your back up plan

While almost all workers in the US who have 40 Social Security credits (roughly 10 years of employment) will be eligible for Social Security benefit, if you don’t qualify, or you want a more comfortable retirement, you are going to need to make some plans to save enough money for your golden years.

So, it’s a great idea to start your retirement planning strategy as early as possible. As a British expat in the US, knowing how your savings could be invested and which retirement plans would be suitable for your situation can be tricky. Talking to the right people with the knowledge to understand your cross-jurisdictional situation is crucial.

Retirement planning advice with Blacktower in the US

Blacktower in the US can help you ensure that you have the right strategy in place to maximise your retirement income.

We specialise in doing this for non-resident aliens and other cross-border interested individuals in the United States.

If you would like to find out more about how we can help you in relation to your retirement planning, education fee planning, management of UK pensions and more, contact us today.

Disclaimer: The provision of information in this communication is not based on your individual circumstances and does not constitute investment advice. Blacktower makes no recommendation as to the suitability of any of the products or transactions mentioned.

* https://squaredawayblog.bc.edu/squared-away/the-art-of-persuasion-and-social-security/ accessed 06-12-19

Related News

The DFM Trend

Even before they disclose their particular circumstances and retirement goals, expats in the United States who are seeking cross-border financial advice bring a whole host of challenges to the wealth manager’s table.

From stringent IRS reporting rules to concerns and confusion over the suitability of various retirement planning vehicles – for example, whether to choose a QROPS, SIPP, IRA, 401(k) or other account – trying to factor in every detail is an enormous responsibility for the 21st century wealth manager. Imagine then trying to juggle such challenges with the day-to-day responsibility of managing portfolios.

Read More

Coming to Terms with Risk in your Retirement Planning

An independent financial advisor and wealth manager can help you decide upon an investment strategy and asset allocation that aligns with your time horizon, retirement goals and risk tolerance wherever you are in the world and wherever your assets are situated. Blacktower (US) LLC brings together the management of UK and US retirement assets in one holistic provision.

Here we examine the nature of risk, particularly in relation to “conservative” investments and shorter time horizons when planning for your retirement.

Read More

Select your country

Please select your country of residence so we can provide you with the most relevant information: