The Power of Patience: Maximizing Your Social Security by Waiting Until 70.

Today we are tackling a topic that is arguably the most important, and often the most misunderstood, financial decision of your life: Social Security.

I see it all the time. Clients, often wanting to retire or seeing a friend start collecting, rush to claim their benefits early—maybe at 62. They're focused on getting the money now. But here’s the cold, hard truth: Claiming early is the most common and expensive retirement mistake for most Americans, especially women.

We are going to flip that script today. We are going to explore the undeniable, mathematically guaranteed benefits of delaying your Social Security benefit until the maximum age of 70. This decision isn't just about a few extra dollars; it's about longevity insurance, securing your spouse's future, and creating an income stream you simply can't outlive.

By the end of this episode, you’ll know the three critical claiming ages, why age 70 is a financial superpower, and exactly how to build a "bridge strategy" to help get you there.

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Transcript

[00:00:00] Speaker 1: The power of patience, [00:00:02] Speaker 1: maximizing your Social Security [00:00:04] Speaker 1: by waiting until 70. [00:00:07] Speaker 1: Welcome to WealthGo, [00:00:08] Speaker 1: where we discuss building wealth, securing your future, and making informed [00:00:13] Speaker 1: financial decisions. [00:00:15] Speaker 1: My name is Stuart Cameron, [00:00:17] Speaker 1: OSJ branch manager and financial advisor with Wharton Investment Consultants. [00:00:22] Speaker 1: And today, we are tackling a topic that is arguably the most important [00:00:27] Speaker 1: and often the most [00:00:29] Speaker 1: misunderstood [00:00:30] Speaker 1: financial decision of your life, [00:00:33] Speaker 1: Social Security. [00:00:36] Speaker 1: I see it all the time. Clients often wanting to retire [00:00:40] Speaker 1: or seeing a friend start collecting, [00:00:43] Speaker 1: Rush to claim their benefits early, maybe at 62. [00:00:47] Speaker 1: They're focused on getting the money now. [00:00:51] Speaker 1: But here's the cold hard truth. [00:00:53] Speaker 1: Claiming early is the most common and and expensive retirement mistake [00:00:58] Speaker 1: for most Americans, [00:01:00] Speaker 1: especially women. [00:01:03] Speaker 1: We are going to flip that script today. We are going to explore the undeniable [00:01:07] Speaker 1: mathematically [00:01:09] Speaker 1: guaranteed benefits [00:01:10] Speaker 1: of delaying your Social Security benefit [00:01:13] Speaker 1: until the maximum age of 70. [00:01:17] Speaker 1: This decision isn't just about a few extra dollars. [00:01:20] Speaker 1: It's about longevity [00:01:22] Speaker 1: in [00:01:23] Speaker 1: insurance, securing your spouse's future [00:01:27] Speaker 1: and creating an income stream you simply can't outlive. [00:01:32] Speaker 1: By the end of this episode, you'll know the three critical claiming ages. [00:01:37] Speaker 1: Why age 70 is a financial superpower [00:01:41] Speaker 1: and exactly how to build a bridge strategy [00:01:44] Speaker 1: to help get you there. [00:01:47] Speaker 1: Let's start with a quick primer. [00:01:50] Speaker 1: Your Social Security benefit is based on your [00:01:53] Speaker 1: highest thirty five years [00:01:55] Speaker 1: of indexed earnings. [00:01:58] Speaker 1: The course core concept to understand [00:02:01] Speaker 1: is your primary insurance amount or PIA. [00:02:05] Speaker 1: This is the benefit that you are entitled to to if you claim at your full [00:02:10] Speaker 1: retirement age or FRA. [00:02:15] Speaker 1: Now FRA is not 65 anymore. [00:02:18] Speaker 1: For most people today, [00:02:20] Speaker 1: FRA is somewhere between 66 [00:02:22] Speaker 1: and 67 [00:02:24] Speaker 1: depending on your birth year. [00:02:27] Speaker 1: If you were born in 1960 [00:02:29] Speaker 1: or later, your FRA [00:02:32] Speaker 1: is age 67. [00:02:34] Speaker 1: There are three key claiming ages to know. [00:02:38] Speaker 1: The earliest, age 62. [00:02:41] Speaker 1: You can start collecting at age 62, [00:02:44] Speaker 1: but your benefit will be permanently reduced [00:02:47] Speaker 1: by up to 30% [00:02:49] Speaker 1: for [00:02:52] Speaker 1: life. Full retirement age, [00:02:54] Speaker 1: FRA [00:02:55] Speaker 1: age 66 to 67.[00:02:58] Speaker 1: If you wait until your FRA, [00:03:00] Speaker 1: you receive a 100% [00:03:02] Speaker 1: of your primary [00:03:04] Speaker 1: insurance [00:03:04] Speaker 1: amount. [00:03:05] Speaker 1: This is the baseline. [00:03:08] Speaker 1: The latest [00:03:09] Speaker 1: age 70. [00:03:11] Speaker 1: If you wait until age 70, [00:03:14] Speaker 1: you receive the maximum possible benefit. [00:03:18] Speaker 1: This leads us to the heart of the matter, [00:03:21] Speaker 1: delayed retirement credits, [00:03:23] Speaker 1: DRCs. [00:03:27] Speaker 1: For every year, we got year for every year you wait to claim past your full retirement age [00:03:32] Speaker 1: up until age 70, [00:03:35] Speaker 1: the Social Security administration [00:03:37] Speaker 1: gives you an 8% [00:03:38] Speaker 1: increase on your benefit. [00:03:41] Speaker 1: That is an 8% [00:03:43] Speaker 1: guaranteed inflation adjusted [00:03:45] Speaker 1: return [00:03:46] Speaker 1: on your benefit. [00:03:48] Speaker 1: Think about that. [00:03:50] Speaker 1: If your FRA is 67 [00:03:52] Speaker 1: and you delay until 70, [00:03:55] Speaker 1: you have three years of 8% [00:03:57] Speaker 1: growth. [00:03:59] Speaker 1: That's a 24% [00:04:00] Speaker 1: increase [00:04:02] Speaker 1: over your FRA benefit [00:04:05] Speaker 1: plus all the annual cost of living adjustments. [00:04:09] Speaker 1: It's hard to find the most secure, [00:04:12] Speaker 1: powerful return [00:04:13] Speaker 1: anywhere else. [00:04:15] Speaker 1: This is why we believe age 70 [00:04:18] Speaker 1: is the magic number. [00:04:24] Speaker 1: Why is this 8% growth so critical, especially for women? [00:04:28] Speaker 1: It all comes down to two major factors, [00:04:31] Speaker 1: longevity [00:04:33] Speaker 1: and survivorship. [00:04:36] Speaker 1: Longevity insurance. [00:04:38] Speaker 1: Statistically, [00:04:39] Speaker 1: women live longer than men. [00:04:42] Speaker 1: If you are 65 today, [00:04:44] Speaker 1: you have a one in four chance of living past the age of 94. [00:04:49] Speaker 1: Your biggest financial risk isn't a stock market crash. [00:04:54] Speaker 1: It's outliving your money. [00:04:57] Speaker 1: By locking in the largest possible monthly check at age 70, [00:05:01] Speaker 1: you are creating an annuity, [00:05:04] Speaker 1: a stream of income that is inflation protected [00:05:07] Speaker 1: and lasts until your [00:05:11] Speaker 1: last breath. Let's say your benefit at full retirement age is $2,000 [00:05:16] Speaker 1: If you wait until 70, [00:05:18] Speaker 1: that check could be 2,480, [00:05:22] Speaker 1: a permanent difference of nearly $500 [00:05:25] Speaker 1: per month. [00:05:27] Speaker 1: That difference compounds every single year with the cost of living adjustments or colas. [00:05:33] Speaker 1: You start with a bigger base, so every cola [00:05:36] Speaker 1: raise is a bigger dollar amount for the rest of your life. [00:05:41] Speaker 1: This is your personal hedge against inflation[00:05:44] Speaker 1: in your eighties and nineties. [00:05:48] Speaker 1: The survivor benefit. [00:05:50] Speaker 1: This point is paramount for married individuals, [00:05:54] Speaker 1: but particularly [00:05:55] Speaker 1: for the surviving spouse, [00:05:57] Speaker 1: who is statistically likely to be the woman. [00:06:02] Speaker 1: When the first spouse passes away, [00:06:05] Speaker 1: the surviving spouse gets to choose the larger of the two [00:06:11] Speaker 1: their own [00:06:13] Speaker 1: or the deceased spouse. [00:06:15] Speaker 1: They do not get to keep both. [00:06:22] Speaker 1: If the high arming spouse [00:06:25] Speaker 1: delays their benefit until age 70, [00:06:28] Speaker 1: they lock in the largest possible benefit. [00:06:31] Speaker 1: This in turn guarantees that the survivor, [00:06:35] Speaker 1: often the woman who relies on this income, [00:06:37] Speaker 1: will receive the maximum possible benefit [00:06:40] Speaker 1: for the rest of her life. [00:06:43] Speaker 1: Delaying Social Security [00:06:45] Speaker 1: is not just a gift to your own retirement. [00:06:48] Speaker 1: It is a vital act of financial planning and security [00:06:52] Speaker 1: for your partner. Social Security checks, [00:06:56] Speaker 1: So [00:06:57] Speaker 1: if the math is so good, [00:06:59] Speaker 1: why do people still claim early? [00:07:02] Speaker 1: The honest answer is usually I need the money now [00:07:06] Speaker 1: or I want to retire earlier than 70. [00:07:10] Speaker 1: These are valid feelings, but as your advisor, I want you to remember [00:07:14] Speaker 1: that Social Security is meant to be a retirement [00:07:18] Speaker 1: lifeline, not a severance package. [00:07:21] Speaker 1: The way we overcome this roadblock [00:07:23] Speaker 1: is with a financial strategy called the bridge strategy. [00:07:28] Speaker 1: Here's how it works. [00:07:29] Speaker 1: Instead of using your Social Security check to fund your early retirement, [00:07:34] Speaker 1: say from age 62 to 70, [00:07:37] Speaker 1: you use other assets in your portfolio to bridge The Gap. [00:07:43] Speaker 1: Determine The Gap. You figure out how much you need to cover expenses [00:07:47] Speaker 1: between your retirement date and age 70. [00:07:51] Speaker 1: Use your portfolio. [00:07:53] Speaker 1: You strategically [00:07:54] Speaker 1: withdraw funds from other accounts. [00:07:57] Speaker 1: Maybe a tax deferred four zero one ks, [00:08:00] Speaker 1: non qualified brokerage savings, or an IRA [00:08:04] Speaker 1: to cover those living [00:08:07] Speaker 1: expenses. The trade off, you're sacrificing [00:08:10] Speaker 1: as potential return from your investment portfolio [00:08:13] Speaker 1: for a guaranteed 8% return [00:08:16] Speaker 1: on your Social Security benefit. [00:08:19] Speaker 1: Most financial experts agree that taking the guaranteed 8% [00:08:24] Speaker 1: far outweighs the risk and potential return of leaving that money invested [00:08:29] Speaker 1: for just a few extra years. [00:08:34] Speaker 1: A tax planning twist. This bridge period, the time between when you retire and when you start Security, [00:08:42] Speaker 1: is often an excellent time for tax planning. [00:08:45] Speaker 1: Since your income may be lower before benefits start, it's the Social Perfect window to execute gross conversions, [00:08:53] Speaker 1: moving money from pretax accounts to tax free accounts at a lower tax rate. [00:08:59] Speaker 1: By executing a smart bridge strategy, [00:09:02] Speaker 1: you're essentially buying a larger [00:09:05] Speaker 1: and inflation adjusted [00:09:08] Speaker 1: and guaranteed [00:09:09] Speaker 1: paycheck[00:09:10] Speaker 1: for life. [00:09:14] Speaker 1: Now I would be a poor advisor and I said everyone should wait until 70. [00:09:19] Speaker 1: Your [00:09:20] Speaker 1: financial life is personal [00:09:22] Speaker 1: and there are situations where claiming early makes sense. [00:09:26] Speaker 1: Here are the key exceptions. [00:09:29] Speaker 1: Shorter life expectancy. [00:09:31] Speaker 1: If you have serious known health issues [00:09:34] Speaker 1: or a family history of early mortality, [00:09:38] Speaker 1: claiming earlier allows you to collect some benefit [00:09:41] Speaker 1: rather than potentially [00:09:43] Speaker 1: none. [00:09:45] Speaker 1: No other resources. [00:09:47] Speaker 1: If you are truly struggling financially, [00:09:50] Speaker 1: have lost a job and have no other savings, [00:09:53] Speaker 1: then Social Security [00:09:55] Speaker 1: is there to be claimed. [00:09:56] Speaker 1: Debt and stress management must come first. [00:10:01] Speaker 1: Unique spousal strategies. [00:10:04] Speaker 1: Sometimes in a married couple, the lower earner should claim early to provide some cash flow, [00:10:09] Speaker 1: allowing the higher earner to maximize their benefit until age 70. [00:10:15] Speaker 1: This ensures the maximum survivor benefit [00:10:18] Speaker 1: we discussed. [00:10:22] Speaker 1: The ex spouse rule. [00:10:24] Speaker 1: Remember, [00:10:24] Speaker 1: if you were married for at least ten years and then and are currently unmarried, [00:10:30] Speaker 1: you might be able to claim a spousal benefit based on your ex spouse's record [00:10:35] Speaker 1: if they are at least age 62, [00:10:38] Speaker 1: which allows your own benefit to grow until age 70. [00:10:42] Speaker 1: This is an important strategy for many women. [00:10:46] Speaker 1: The main takeaway here is don't make this decision in a vacuum. It must be part of your comprehensive [00:10:53] Speaker 1: financial plan. [00:10:56] Speaker 1: We've covered a lot today. Let's quickly recap. [00:10:59] Speaker 1: Age 62, [00:11:02] Speaker 1: permanent lifelong reduction. [00:11:04] Speaker 1: Avoid if possible. [00:11:07] Speaker 1: Full retirement age, FRA, [00:11:10] Speaker 1: a 100% of your benefit, [00:11:12] Speaker 1: a baseline. [00:11:14] Speaker 1: Age 70, [00:11:16] Speaker 1: the maximum [00:11:17] Speaker 1: benefit, thanks to the 8% guaranteed [00:11:20] Speaker 1: delayed retirement credit. [00:11:23] Speaker 1: Waiting until 70 is not about denying yourself happiness in early retirement. [00:11:28] Speaker 1: It's about giving yourself [00:11:30] Speaker 1: the most powerful [00:11:31] Speaker 1: longevity [00:11:32] Speaker 1: insurance possible. [00:11:34] Speaker 1: It maximizes your own future income and secures the highest possible [00:11:39] Speaker 1: survival survivor benefit for your loved ones. [00:11:44] Speaker 1: So don't rush one of the most important financial decisions of your life. [00:11:49] Speaker 1: Get the facts, [00:11:50] Speaker 1: run the numbers and build a strategic bridge plan. [00:11:55] Speaker 1: Let's turn your Social Security promise into the strongest pillar of your retirement income. [00:12:02] Speaker 1: Thank you for tuning in, and I look forward to helping you with your financial goals. [00:12:08] Speaker 1: Thanks for joining me on this episode of Wealth Grow. If you found this helpful, [00:12:13] Speaker 1: please subscribe and leave us a review. [00:12:16] Speaker 1: Got questions or a topic you'd like us to cover? Reach out on social media [00:12:21] Speaker 1: or whartonic@Ceteranetworks.com. [00:12:25] Speaker 1: Thanks for listening. And until next time, plan plan wisely,[00:12:30] Speaker 1: invest smartly, [00:12:31] Speaker 1: and build a legacy [00:12:34] Speaker 2: that lasts. These podcasts are brought to you by Wharton Investment Consultants. 5010 Canby Drive, Wilmington, Delaware 19808. [00:12:42] Speaker 2: Telephone, (302) [00:12:44] Speaker 2: 239-2111 [00:12:47] Speaker 2: Securities offered through Cetera Wealth Services, LLC, member FINRA slash SIPC [00:12:53] Speaker 2: Advisory services offered through Cetera Investment Advisors LLC, a registered investment adviser. [00:13:00] Speaker 2: The views depicted in this material are for information purposes only and are not necessarily those of Wealth Services, LLC. [00:13:08] Speaker 2: They should not be considered specific advice or recommendations [00:13:11] Speaker 2: for any individual. [00:13:13] Speaker 2: Neither CEDAREN nor any of its representatives may give legal or tax advice. [00:13:18] Speaker 2: All investing involves risk, including the possible loss of principal. [00:13:23] Speaker 2: There is no assurance that any investment strategy will be successful. 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[00:14:11] Speaker 2: To qualify for the guarantee or represent that it tax free and penalty free withdrawal or earnings, a Roth IRA must be in place for at least five tax years, and the distribution must take place after age 59 [00:14:21] Speaker 2: or due to death, disability, or a first time home purchase up to a 10,000 [00:14:25] Speaker 2: lifetime maximum. [00:14:27] Speaker 2: Depending on state law, Roth IRA distributions may be subject to state taxes.