There’s no doubt that it’s been a challenging year. With the COVID-19 pandemic, many have been forced away from work either permanently or through a furlough scheme. While unemployment checks or relief payments have assisted some, it hasn’t been enough for others. For those over age 62, this raises an important debate: should you dip into retirement savings or start Social Security early?
You’re wondering which solution is better, and we want to start by turning you away from these options (if we can). If possible, find another solution rather than starting Social Security or tapping into retirement savings. At this age, you need to keep both intact. If you can keep retirement savings secure and avoid claiming Social Security, this will keep you in a much stronger position for later life.
First Solution: Exhaust Other Options
If you haven’t yet exhausted your other finance sources, don’t look to these two solutions just yet. For example, will your mortgage or loan lender allow you to delay payments temporarily? Alternatively, is there a scheme that will enable you to hold back on insurance or utility payments? Some even turn to food banks for help (there’s no shame in this!).
For those who have tried everything and still need help, the lesser of two evils is to take funds from your retirement savings instead of claiming Social Security. For most people, this is simply a short-term shortage of funds. Although things might look bleak now, you may be able to turn everything around soon. If the situation changes and you find a job, you can stop taking from savings and even start putting back into a savings account to make up for what you’ve taken.
If you start taking Social Security checks, undoing this when everything goes back to normal is harder. For those who have already chosen this option and now regret it, there is a ‘withdrawal of application’ process that may help. Essentially, you pay everything back, and then it will be as if you’ve never taken a check. Unfortunately, the difficulty with this option is that it needs to be activated within 12 months of the initial application. If you spent all the money on bills and are trying to survive, you might struggle to pay everything back within this timeframe. You will also use your one ‘do-over’—you cannot withdraw an application a second time.
As a word of warning, the withdrawal of the application option isn’t available for those born before 1954 and who have reached FRA (full retirement age). This being said, there is an option to suspend benefits without having to pay anything back. Your account will be paused until you start to claim again, and each month paused will earn delayed retirement credits. When you eventually restart, Social Security benefits will be higher.
Summary
We know it can be scary to lose your primary source of income shortly before retirement. We urge you to be cautious and not make knee-jerk decisions. Before anything, exhaust all other avenues. If you’re forced into taking action, dip into retirement savings first because it’s easier to repair the damage.
If you’re worried and don’t know where to turn, talk to a financial professional to get tailored advice!
Contact Information:
Email: [email protected]
Phone: 3604642979
Bio:
After entering the financial services industry in 1994, it was a desire to guide people towards their financial independence that drove Aaron to start Steele Capital Management in 2013. Armed with an extensive background in financial planning and commercial banking coupled with a sincere passion for helping people, Aaron has the expertise and affinity for serving the unique needs of those in transition. Clients benefit from his objective financial solutions and education aligned solely withhelping them pursue the most comfortable financial life possible.Born in Olympia, Washington, Aaron spent much of his childhood in Denver, Colorado. An area outside of Phoenix, Arizona, known as the East Valley, occupies a special place in Aaron’s heart. It is where he graduated from Arizona State University with a Bachelor of Science degree in Business Administration, started a family, and advanced his professional career.Having now returned to his hometown of Olympia, and with the days of coaching his sons football and baseball teams behind him, he now has time to pursue his civic passions. Aaron is proud to serve on the Board of Regents Leadership for Thurston County as the Secretary and Treasurer for the Morningside area. His past affiliations include the West Olympia Rotary and has served on various committees for organizations throughout his community.Aaron and his beautiful wife, Holly, a Registered Nurse, consider their greatest accomplishment having raised Thomas and Tate, their two intelligent and motivated sons. Their oldest son Tate is following in his father’s entrepreneurial footsteps and currently attends the Carson College of Business at Washington State University. Their beloved youngest son, Thomas, is a student at Olympia High School.Focused on helping veterans and their families navigate the maze of long-term care solutions, Aaron specializes in customized strategies to avoid the financial crisis that care related expenses can create. Experience has shown him that many seniors are not prepared for the economic transition that takes place as they reach an advanced age.With support from the American Academy of Benefit Planners – an organization with expertise and resources on the intricacies of government benefits – he helps clients close the gap between the cost of care and their income while protecting their assets from depletion.Aaron can help you and your family to create, preserve and protect your legacy.That’s making a difference.
Disclosure:
Disclosure:Investment advisory services are offered through BWM Advisory, LLC (BWM). BWM is registered as an Investment Advisor located in Scottsdale, Arizona, and only conducts business in states where it is properly licensed, notice filed, or is excluded from notice filing requirements. BWM does not accept or take responsibility for acting on time-sensitive instructions sent by email or other electronic means. Content shared or published through this medium is only intended for an audience in the States the Advisor is licensed in. If you are not the intended recipient, you are hereby notified that any dissemination, distribution, or copy of this transmission is strictly prohibited. If you receive this communication in error, please immediately notify the sender. The information included should not be considered investment advice. There are risks involved with investing which may include market fluctuation and possible loss of principal value. Carefully consider the risks and possible consequences involved prior to making an investment decision.Confidential Notice and Disclosure: Electronic mail sent over the internet is not secure and could be intercepted by a third party. For your protection, avoid sending confidential identifying information, such as account and social security numbers. Further, do not send time-sensitive, action-oriented messages, such as transaction orders, fund transfer instructions, or check stop payments, as it is our policy not to accept such items electronically. All e-mail sent to or from this address will be received or otherwise recorded by the sender’s corporate e-mail system and is subject to archival, monitoring or review by, and/or disclosure to, someone other than the recipient as permitted and required by the Securities and Exchange Commission. Please contact your advisor if there are any changes in your personal/financial situation or investment objectives for the purpose of reviewing/evaluating/revising our previous recommendations and/or services. Additionally, if you change your address or fail to receive account statements from your account custodian, please contact our office at [email protected] or 800-779-4183.
