Social Security at Age 67? Redefining Your Retirement Timeline

Is 67 still the magic number when it comes to Social Security? The answer may surprise high-net-worth individuals. Although 67 is the full retirement age (FRA) for many, it is not always the best time to claim Social Security.

As experts in retirement planning for high-net-worth individuals in Woodbridge and throughout Connecticut, we at Heritage Capital appreciate the subtleties of high-net-worth retirement planning. Before you can claim Social Security, let’s discuss things to remember and how individualized planning can be highly beneficial.

Understanding Social Security at Age 67: The Fundamentals

FRA is 67 for those born in 1960 or later. Taking Social Security benefits prior to this age, as early as 62, reduces monthly payments. However, postponing benefits to age 70 can maximize your monthly benefit. The Social Security Administration determines benefits using your inflation-adjusted 35 top-earning years. 

Social Security was never intended to be the only source of retirement funds. For those with more assets and revenue sources, this benefit plays an auxiliary role, making its timing even more critical. Assessing how Social Security fits within one’s overall financial situation necessitates an informed understanding of how multiple factors relate to one another.

Why High-Net-Worth Individuals May Consider Changing at 67

Just because 67 is considered full retirement age doesn’t always mean it’s the right choice for everyone—here’s why.

Longevity Factors to Consider

Individuals with high net worth enjoy superior health and lifestyles that promote longer life expectancies. Postponing Social Security benefits can translate to increased lifetime payments and is, therefore, a strategic option to pursue by those with longer anticipated retirement years.

Investment Portfolio Strategy

If you have significant investment portfolios, you can potentially draw on your assets and keep your Social Security benefits untouched to grow. When you have a diversified portfolio to draw on, you are less likely to be impacted by sequence-of-returns risk (i.e., the danger that poor investment returns early in retirement, combined with regular withdrawals, could deplete your portfolio faster than expected).

Social Security Tax Implications

Social Security benefits may be taxable depending on your level of income. Coordinating when you receive your benefits with other earnings sources can help you lower your tax bill. As an illustration, making withdrawals of tax-deferred funds earlier in retirement can reduce your required minimum distributions, smoothing out your total tax bill.

Estate Planning Objectives

Strategic timing of Social Security benefits may impact estate planning. If you defer benefits, you can save other assets for the purpose of passing them to heirs. Survivor benefits planning provides for bequests to comply with your wishes regarding your legacy.

Waiting to claim benefits at 67 will sacrifice increased payments at age 70. If you can afford it, delaying may give you a higher return on your Social Security investment. Comparing breakeven points and opportunity costs to portfolio requirements may reveal the hidden benefits of delaying.

The Role of Personalized Financial Planning

Getting maximum value out of your Social Security benefits largely depends on how well your overall financial situation is managed. This is where a custom financial plan can be invaluable:

• Why a one-size-fits-all solution doesn’t fit: No two individuals have identical financial circumstances. Personalized financial planning guarantees your retirement plan will accommodate your situation and personal objectives. Some clients, for instance, value income smoothing, whereas others seek to minimize lifetime taxation or leave behind a particular legacy.
• The Value of a Fee-Only Fiduciary Advisor: As a fee-only financial advisor in Connecticut, Heritage Capital is dedicated to working in your best interest. Our fiduciary obligation obliges us to give you unconflicted recommendations based on your specific needs rather than selling you something. You should be working with an advisory team compensated for guidance, not sales.
• Prominent among these is Paul’s AIF® Designation: Our founder, Paul Schatz, is an Accredited Investment Fiduciary (AIF®), emphasizing his dedication to fiduciary excellence and experience in high-net-worth retirement planning. The AIF® designation indicates superior knowledge of plan stewardship and prudent investment practices—both of which are paramount when optimizing a Social Security strategy as part of an overall retirement plan.

Important Personalized Retirement Planning Aspects

Your retirement plan requires the following:

• Thorough financial evaluation
• Income needs analysis
• Investment portfolio integration
• Tax optimization techniques
• Long-term care issues
• Legacy planning

These components work together to align every aspect of your plan—from your cash flow to your philanthropic contributions—with your long-term goals.

Heritage Capital: Your Retirement Planning Partner

Selecting an appropriate advisor for your retirement path is critical. We can assist you in looking beyond the status quo and creating a retirement plan that aligns with your values, objectives, and lifestyle.

At Heritage Capital, we provide financial planning services to high-net-worth individuals living in Woodbridge and throughout Connecticut. From investment portfolio management to Social Security planning, we’re dedicated to representing your best interests.

We invite you to contact us and visit our Insights page to discover additional useful tips.  We’re here to enable you to retire your way and not according to government timing.