About Letort Trust

LeTort Trust is an Independent Trust Company with a single focus of providing personalized financial solutions to individuals, businesses and institutions. As an Independent Trust Company, we are held to the highest standards of fiduciary accountability in the industry. Our clients depend on the prudence and expert guidance we provide through our customized wealth management and retirement plan services.

 

5 Important Things You Should Know About Social Security

Social Security still plays an important role in providing a portion of your income during retirement. According to statistics provided by the Social Security Administration, about 65% of retirees rely on half or more of their income from Social Security. Therefore, it is important to understand the ins and outs of Social Security in order to maximize the lifetime benefits that you receive from this source.

1)    Cost of Living Adjustments are Variable

The Cost of Living Adjustment (COLA) to Social Security payments is adjusted each year based on the increase in the Consumer Price Index. Each year’s adjustment varies accordingly and some years have provided no increase in payments. For 2014, the COLA adjustment is a 1.5 percent increase. It is important to note that in some years, there was no COLA increase and in many years, the increase did not necessarily keep pace with inflation. This could have an impact on how you invest your other sources of income during retirement to keep pace with future rates of inflation.

 

2)    When You Start Taking Social Security Payments Matters

When you start taking Social Security is a highly personalized decision, dependent on a number of factors including your need for income, family situation, working status, health and other variables. One thing to keep in mind is that the longer you put off receiving your benefits, the larger the payments will be each month when you do begin taking Social Security.

“Full Retirement” is defined by the Social Security Administration as the age when you are eligible to receive the maximum payment per month due for your Social Security Benefits. The following provides an outline of the age considered by SSA to be “Full Retirement Age”.

Birth Year               Full Retirement Age

1943-1954                     66

1955-1959                     66-67

1960 or later                  67

Although you are eligible to begin receiving Social Security at age 62, you could be getting up to 25% less than your maximum benefit when you start earlier than your full retirement age. If you determine that you want to delay payments until beyond your full retirement age, your monthly payments will continue to increase due to credits accrued for a later start date. You can earn an additional 8% per year by waiting to apply for Social Security until you reach your full retirement age. This additional increase continues if you delay payments until age 70. And, did you know that Social Security offers lump sum payments? Read More.

To determine more accurately your benefits at various ages, visit the attached Social Security Benefits Calculator at the SSA website. For additional information, click on When to Take Social Security Benefits.

 

3)     Spousal Benefits Can Be Complex

Social Security Benefits for a Spouse (or Ex-Spouses) are variable depending on many factors:

–      Length of Time in Marriage

–      Marital Status: Divorced, Widowed or Remarried

–      Working Status of Spouse

–      Age of Requesting Benefits

–      Other Factors

A spouse can collect 50% of his/her spouse’s benefit as long as they have reached the full retirement age. When a Spouse dies, the remaining spouse receives 100% of what the deceased was receiving or their own Social Security Benefit (whichever is greater). For more complex situations involving divorced spouses, the benefits apply under specific conditions. To determine the unique details of your family situation, visit the Spousal Benefits Section of the SSA Website for additional information.

 

4)     Maximizing Benefits as a Couple Requires Planning

In some situations, two earning spouses can maximize their benefits by timing the start of Social Security Benefits as a couple.  The lower earning spouse can begin to collect at age 62 at a reduced rate, providing income and protecting the higher earning spouse’s benefits until age 70. The higher earning spouse can then begin collecting at the higher monthly payment. If the spouse dies, the lower earning spouse will be able to collect at 100% of the higher monthly payment.

In another scenario, you as the lower earning spouse can wait until full retirement age, collect half of the higher earning spouse’s benefit – whether or not you continue to work and then claim your own larger benefit later. This gives you an income stream, while allowing your own benefit to continue to grow until you reach age 70. At that time, you can switch to your own benefit which will be much larger than had you taken it at your full retirement age.

As you can see each situation is unique and should be carefully considered based on your own circumstances and need for income. For more tips on how married couples can maximize their benefits: Read More.

 

5)     Working While You Receive Social Security Can Payoff in the Long Run

Many individuals want to continue working on a full or part-time basis, but are concerned about taxes and loss of their benefits by working while receiving benefits. Although your earnings will be subject to payroll taxes even if you are receiving Social Security benefits, you most likely will be increasing your future Social Security benefits by continuing to work during retirement. Higher benefits can be important to you later in life and the increase might benefit you and your family in the future. While you continue to work during retirement, your earnings will reduce your benefit amount, but only until you reach your full retirement age. Once you reach full retirement age, your benefits are recalculated and the benefit is factored back into your payments.

Many nuances of Social Security planning have been overlooked by retirees and putting more time into planning this source of income can often times yield significant benefits. The attached slide show shares a few additional tips on how to understand and maximize your Social Security Benefits. Click on Slideshow. Once you are ready to begin the planning process, you can build a secure online account to help you manage the process by signing up on the Social Security website at: My Online Social Security Account.