Social Security Maximization

Erik:                                     00:06                    You're listening to uncommon sense, a podcast by Bowman Financial Strategies. I'm your host Erik Bowman, and thank you for joining me today. Hi everyone. Erik Bowman here, the owner of Bowman financial strategies in Englewood, Colorado. I appreciate you listening today. Today's podcast is going to be discussing something that we work on every single day in our firm and that is social security maximization. We're going to discuss not only the basics of social security maximization, but what are the three biggest mistakes people tend to make when filing for social security? So to get started, social security maximization is the process of analyzing all potential filing strategies available to a household and determining which strategy offers the highest potential income. You have worked over 80,000 hours [based on a 40 hour work week times 35 years] and contributed to social security for your whole life. You deserve to receive the highest income possible. Unfortunately, the social security administration cannot and will not help you determine what filing strategy is in your best interest.

Erik:                                     01:15                    The Social Security Administration can only tell you how much your benefit would be at any filing age. They are neither licensed nor allowed to discuss filing strategies with the public. With a lifetime value of potentially over $1 million for a household. We recommend that you put the appropriate amount of effort into making this extremely important choice when to take social security. So to the question when to take social security, everybody has 96 basic social security filing choices, meaning you can take it as early as age 62 and you can delay as long as age 70 and if you count the number of months up (because you can take your social security benefit at any month in between those two ages), you have a total of 96 discrete choices and if you're married, your spouse also has 96 discrete choices, which means when you look at the combinations of filing strategies, there are over 9,216 basic filing strategies for an American couple.

Erik:                                     02:18                    In addition, if you include all of the spousal benefit choices that are available to a married couple and to divorce participants, potentially the number of filing choices exceeds over 100,000 [https://www.ssa.gov/benefits/retirement/matrix.html] and if you compare all of those potential combinations of filing strategies, you could sort them from the highest amount of income you'll receive over retirement to the lowest amount of household income you're going to receive over retirement, and that difference can be as high as $150,000 or more of lifetime retirement income. In other words, by making the wrong filing choice, you could receive $150,000 less in lifetime income than if you made a more strategic decision.

Erik:                                     03:04                    The three biggest mistakes that people make when filings for social security, in my opinion, are number one, not paying attention to potential spousal survivor benefits, and only looking at a basic break even equation for your own personal benefit. By doing this, you totally miss out and don't calculate the additional survivor benefit that would go to a surviving spouse in the event of death of a social security recipient. For example, if the higher wage earner delays taking benefits until age 70 increasing the total amount of social security they would get each year. If that person were to pass away, that higher check is going to be left behind for the survivor. On the other hand, if that higher wage earner took their social security benefit at age 62 for example, the earliest possible age to be able to take social security, the reduction is tremendous and that is going to be forever reduced in the amount that would be left behind for a surviving spouse. Most of the time it is the male that's going to pass away first and therefore leaving a lower amount of ongoing monthly benefit to a surviving spouse.

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