Is Your Financial Advisor Providing Sound Advice?

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Retiring at the age of 62 and claiming Social Security benefits might seem like the ideal choice for many individuals. However, it’s crucial to understand the consequences of this decision on your long-term financial well-being.

Recent research has shown that working with a financial advisor may not always lead to delayed benefit claims. In fact, households with higher wealth tend to claim benefits two years later when working with financial professionals who are paid hourly, such as accountants, compared to commission-based advisors. On the other hand, affluent households working with any type of financial professional, particularly brokers, tend to claim Social Security earlier. These findings reveal the importance of understanding the role of financial advisors in making informed decisions about claiming Social Security benefits.

Why Waiting to Claim Social Security is Beneficial

When beneficiaries claim Social Security at age 62, their benefits are permanently reduced. Waiting until their full retirement age, typically between 66 and 67, allows them to receive 100% of their earned benefits. Further delaying the claim until age 70 can result in a 77% higher monthly benefit compared to claiming at 62.

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However, it’s essential to note that delaying benefit claims require alternative sources of income during the interim period. This decision is not a “free lunch,” and individuals need to consider their financial situation before opting for delayed claiming.

At Extreme Investor Network, we emphasize the value of delaying Social Security benefits not only for the increase in benefits but also for the annual cost-of-living adjustments tied to inflation. With no annuities offering similar inflation links, delaying Social Security benefits can provide financial security in retirement.

How to Evaluate Claiming Advice

Not all financial advisors have the same knowledge of Social Security claiming rules. Prospective claimants can assess the quality of advice based on certain factors, including longevity assumptions and investment return comparisons.

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One important tool individuals can utilize is the Actuaries Longevity Illustrator to gauge longevity estimates. Additionally, investment returns should be based on conservative holdings like government bonds rather than stocks. By considering these factors, individuals can make more informed decisions about when to claim Social Security benefits.

At Extreme Investor Network, we prioritize guiding individuals through the decision-making process, taking into account factors such as health status, other sources of income, and the impact of the claiming decision on spouses. Our goal is to help individuals protect their lifetime income and make their money last in retirement.

While concerns about the future of Social Security are valid, claiming early may not be the best solution. By delaying benefits, any future prospective cuts would be applied to a higher benefit amount, increasing lifetime income. Even short-term delays can have a positive impact on overall financial security in retirement.

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Join Extreme Investor Network to access exclusive content and resources that will help you make informed decisions about your retirement planning and Social Security benefits. Our expert advice and personalized guidance can ensure a secure financial future for you and your family.

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