Recently, June (not her real name) was struggling to set up a social security account for her retirement. Her 65th birthday was approaching, she had health issues and was going to retire. I was with her when she made her second attempt to set up the Social Security account. June attempted to set up the Social Security account online first. Unfortunately, as June learned from the helpful Social Security representative later, the online Social Security questions tend to be based on addresses and other information so old, that applicants can rarely answer all the credit security questions correctly, and are kicked out of the online application.
Lesson one: apply in person to set up the Social Security account, then manage the account online.
When June and I arrived at the Social Security office several minutes before it opened, we found a line of Social Security applicants and recipients from the locked door to the parking lot. When the doors opened, the first people allowed in, were those who had made appointments.
Lesson two: make your appointment with social security to set up your social security account. This will save you hours waiting for your number to be called. When you call to set that appointment expect there to be a delay of one to two months.
Your appointments can be either by phone or in person. June opted for the phone option, but the social security representative stressed how important it is to answer your phone at that time no matter what the number is on the caller id display. Because there is the risk of the wrong call at that time, I personally would meet in person, but each applicant needs to make the decision that is best for them.
Lesson Three: appointment can be by phone or in person.
One of the reasons June had to make an appointment is the Windfall Elimination Provision which reduces the amount of Social Security Benefits available if she receives pension income from years in which she did not pay into Social Security. The windfall provision means there is a set amount of monthly income, based on the number of years paid into the system and the age of retirement. If pension(s) contribute too high an amount to the monthly benefits, the Social Security benefit will be cut by that same amount to reach the predetermined total monthly benefit. Got to the WEP site for a much more detailed explanation. It is important to understand your benefits and options BEFORE you retire.
Lesson Four: Assume nothing about your retirement income and do your research.
Retirement accounts such as whole term life insurance, 401K accounts and IRA accounts, regardless of the type of account you set up, make a big difference when it is time for your retirement decisions. Many people retire at 65 but in fact, if you can work until you are 70 years old, you can realize a more robust income from benefits.
Lesson Five: Open a retirement account if you don’t have one, no matter what age you are, and start putting money aside for retirement.
Because June’s health has limited her options, she may retire well below the monthly benefit amount a healthy worker could obtain by working until they turn 70 years of age. The biggest less I learned as a bystander of June’s application process, is to be informed, talk to a good financial advisor, and be prepared ahead of time. Retirement could be a wonderful period, but financial stress can dampen your experience. If you do not already have a financial advisor to help you figure out your best options, come see us at www.investmentsstore.com and get matched to someone who will listen and understand your retirement needs.