Retirement is just around the corner—HOORAY! Or maybe it’s still a few years down the road. Regardless, preparing for retirement is no easy task. There are a few common mistakes pre-retirees make, but that can be avoided through proper planning.
Not Budgeting
The word “budget” has some negative connotations as it seems restrictive or daunting to have to track how we spend money. However, knowing what is coming in and out of your accounts every month is vital to prepare for retirement.
Budgeting helps you to see what you are spending each month and to plan accordingly for the future. You cannot invest or save an adequate amount of money for retirement if you don’t know what you’ll need each month.
Not Saving or Investing for Retirement
While budgeting your dollars and monthly income is a big part of the process, 45% of Americans say that they have saved nothing for retirement. (1)
Investing is crucial if you want to live comfortably in retirement, and your investment strategy will depend on several factors, including personal financial objectives. A financial planner can help you hash out those objectives and implement strategies to assist you in reaching your goals.
Not Adjusting Your Asset Allocation
Once you’ve started investing for retirement, periodically you will need to adjust your asset allocation. Asset allocation is an investment strategy that aims to balance risk and reward by apportioning a portfolio’s assets according to an individual’s goals, risk tolerance, and investment horizon. (2)
This means that the older you get, the less risky you will want your investments to be so that you don’t lose a large portion of your assets if something were to happen to the economy (like COVID-19) or otherwise.
Not Having a Lifestyle Plan
Retirement is an accomplishment many hope to achieve someday. But have you thought about how different it will be in retirement than during your working years? How are you going to spend your time and your money when you’re retired?
You will need to think about these things when planning your retirement. After all, it’s not just about having enough money or assets to support you, it’s about having fun too!
If you have any questions about your retirement plans, our team at Benchmark Wealth Management is ready to assist. Please call 860.434.6890 or email me at thomas.britt@bwmllc.net to arrange a consultation.
About Thomas
Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 20 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a CERTIFIED FINANCIAL PLANNER™ (CFP®) professional and holds the Master Planner Advanced StudiesSM (MPAS®), Certified Investment Management Analyst (CIMA®), and Chartered Retirement Planning Counselor (CRPC®) designations. He earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Private Client Services is an unaffiliated entity.
At Benchmark Wealth Management, we believe in three core tenets in dealing with the uncertainty of the financial markets.
The absolute truth is that nobody can tell the future. When crafting a financial plan, we all focus on goals, dreams, risks and fears, but most people do not put an emphasis on weathering the downturns.
At Benchmark, we understand and embrace the concept of financial resiliency – the ability to withstand life events that have an impact on your income or assets. We don’t view stressful situations as unsolvable, rather, we perceive them as a learning experience and an opportunity for personal growth or development.
It is important to have a financial plan founded upon resiliency. A plan shifts the focus from fear and anxiety and directs it to building a strong foundation that has you covered in all financial climates.
If you’re looking for help in building a more sustainable and resilient financial life, contact us today. Listen below for more information.
Maintain Financial Resiliency with Benchmark Wealth Management
Does it seem like there are more and more news updates about hackers and breaches in security? As we become increasingly dependent on technology and use multiple devices on any given day, there are more opportunities for our personal information to be compromised. But no matter how daunting this may seem, just remember that one of the best things we can do is learn about what cyberattacks are and how to prevent them from happening.
What Are Cyberattacks?
First, let’s look at what cyberattacks are and why they pose a threat to you and your money. Cyberattacks are malicious attempts to access or damage a device’s data, including computers, phones, gaming devices, printers, and other devices. If the hacker succeeds, they could access your personal information and the capability to block access or delete your documents and pictures. (1) With this information, they could potentially steal your identity, money or credit, damage your reputation, or jeopardize your safety.
Not something you want to experience, right? Here are 4 simple steps you can take to ensure your safety.
1. Strengthen Your Passwords
Your first line of defense online is passwords. Your passwords are the gates between criminals and things like your financial accounts, so you want them to be as strong as possible. And when it comes to passwords, strength comes from complexity. Aim to use a mix of upper- and lowercase letters, special characters, and numbers. To make them easier to remember, choose a phrase or acronym that you created yourself.
In addition to strong passwords, you want to make sure you have separate passwords. Don’t use the same one, or a simple variation of the same one, for multiple accounts or websites. Also, avoid using your name, government ID numbers, address, or other personal information that can be easily found, such as the names of your children or pets.
Consider using a password management app or software. (2) They take the pressure off you to remember every single password and remove the temptation to have them written down somewhere. It’s also good practice to change your passwords 3 to 4 times a year. When offered, add a second barrier to entry in addition to your password with two-factor authentication.
2. Screen Your Emails
Phishing scams show up in your inbox regularly, even if you’ve applied stringent security settings to your email account. If an email sneaks in that looks like it is from a financial institution, do not click on any of the links or open any attachments. Most financial institutions will send you a secure message through your account rather than a direct email. Delete the email or report it to your provider.
Before you click on a link in any email, check two things: the sender’s email address and the link destination. Phishers often try to look legitimate by showing up in your inbox with a realistic name, but if you hover your mouse over the sender’s name, you will see the full email address to determine if it is from a trusted source or not. Use the same tactic with the clickable links inside the email message. Hover your mouse over the hyperlink and see where the link will take you. If it looks suspicious, delete the email. To be safe, when shopping online, type the retailer’s URL into your browser instead of clicking email links.
3. Be Picky About Your Wi-Fi
We’re so used to using our phones everywhere we go that we often don’t think about the security of the Wi-Fi networks we connect to. But it might be worth it to give it some extra thought, especially when you are shopping online while using public Wi-Fi. Avoid submitting your credit card information unless you are connected to a private, secure wireless network. In other words, save your shopping for home or another trusted network, not for your local coffee shop.
If you do need to enter personal information on the go, turn your Wi-Fi off and use your phone data, connecting you to your more-secure cellular network, or consider investing in a virtual private network (VPN) so you can use public Wi-Fi with more peace of mind.
4. Take Advantage of Alerts
Many financial institutions offer customizable notifications. You can choose to receive alerts for transactions placed outside of your geographical area, purchases above certain amounts, or instances when your credit card is used without the card being present. If you receive a notification for a charge you did not make, alert your credit card company or bank immediately and freeze the account.
Notifications aside, be sure to regularly review your credit card transactions. Make it a habit to check for unknown line items or irregularities. Inspect your credit report and look for errors in your personal information or lines of credit. If you see anything amiss in these reports, your identity may have been stolen. You can get three free credit reports a year from annualcreditreport.com and a free TransUnion and Equifax report once a week from creditkarma.com.
Protect Yourself
While it can feel unnerving to think about cyberattacks and hacking, implementing some of these tips may help you feel more confident and can help you reduce your risk. If you have questions about your online information or how Benchmark Wealth Management will work to protect your information, call 860.434.6890 or email me at richard.stout@bwmllc.net to schedule a consultation.
About Rick
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary (AIF®) designation. He has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning and holds the Master Planner Advanced StudiesSM (MPAS®). He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. He also completed the Accredited Wealth Management Advisor (AWM®) program through the Estate and Wealth Strategies Institute at Michigan State University. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.iapd.com, searching with our company name or unique identifier, CRD # 160192. Past performance is not a guarantee of future results.
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Private Client Services is an unaffiliated entity.
When stay-at-home orders were announced and businesses suddenly shut down or limited, we knew we had to do something to help the most vulnerable in Lyme and Old Lyme, Connecticut. So when The Lyme-Old Lyme Coronavirus Relief Fund was set up through the Lymes’ Youth Service Bureau (LYSB), we reached out with a challenge to the community and announced that we would match all donations on a one-to-one basis up to a total of $10,000.
Well, we are happy to report that the community responded! The coronavirus pandemic has been unprecedented, but the good news is that so has the response of many generous people just like you.
Thank you for rising to the challenge and making a difference! For more information on how we serve our community, please call 860.434.6890 or email us at richard.stout@bwmllc.net.
About Rick
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary (AIF®) designation. He has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning and holds the Master Planner Advanced StudiesSM (MPAS®). He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. He also completed the Accredited Wealth Management Advisor (AWM®) program through the Estate and Wealth Strategies Institute at Michigan State University. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
About Thomas
Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 20 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a Certified Financial Planner™ (CFP®) professional and holds the Master Planner Advanced StudiesSM (MPAS®), Certified Investment Management Analyst (CIMA®), and Chartered Retirement Planning Counselor (CRPC®) designations. He earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.iapd.com, searching with our company name or unique identifier, CRD # 160192. Past performance is not a guarantee of future results.
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AZ, CA, CT, FL, KY, MA, ME, MI, MN, NH, NJ, NY, RI, TX. (Securities-related services may not be provided to individuals residing in any state not previously listed) Advisory services offered through Benchmark Wealth Management, LLC a Registered Investment Advisor. Private Client Services is an unaffiliated entity.
When the unexpected happens, chaos can result. Remind you of any current events? We know it’s important to be prepared, but without a plan of action in place, doing what’s best for you and your family in the midst of a crisis is infinitely harder.
I’m talking specifically about a financial plan, which is essentially having all the details about your financial life in one place, including your savings, debt, assets and investments, life insurance, and other elements that apply to your financial situation. (1) This means that when a crisis hits, rather than resorting to panic or stress, you can rely on a thorough plan of action for handling your finances.
Be Ready When Chaos Comes
Let’s start with the elephant in the room, or more accurately, the potential virus in the room. This is not the first time (and won’t be the last) there has been a threat to your health, lifestyle, or money. Since we know this reality, being prepared for when, not if, these circumstances arise is key for having stability and security, no matter what comes your way.
When there is already a plan in place, the panic some people feel is eliminated. Plans set people up for success and everyone deserves the chance to succeed.
Achieve Your Goals
Did you know you are 42% more likely to achieve your goals if you write them down? (2) Having a financial plan is not just about managing your money, it’s about making sure the time spent to earn your money is used to reach the dreams you have for you and your family, giving you a life full of satisfaction and contentment.
What do you want for your life now and in the future? What about your loved ones? Whether it’s vacations, having more time at home, putting your kids through college, retiring with dignity, or some other desire, chances are that it involves having some money and a plan for how that money should be allocated.
Starting a financial plan now will allow the future you desire to become a reality.
Secure Your Future
Review the following actions you can take now to secure your future, which are the basic building blocks of creating a financial plan:
Know your current situation by creating a budget.
Have emergency savings for when unexpected expenses arise or to weather a potential job loss.
Total up how much debt you have and calculate how much of your monthly income is going toward minimum payments. Create a plan of action for paying down those debts.
Determine the household income you need to earn in order to reach your goals.
Understand how much you need to invest per month for retirement, which is something a trusted financial advisor can help you determine.
Are You Ready to Create a Financial Plan?
If you don’t currently already have a financial plan in place, now is the time to create one. And as you’re likely spending a lot more time at home lately, it’s a great opportunity to tackle this task. We know this can feel daunting, but remember that our team at Benchmark Wealth Management is here to guide you. We can assess your current financial situation, help you make the necessary changes, or affirm that your investments are exactly where they should be. Don’t hesitate to call 860.434.6890 or email me at thomas.britt@bwmllc.net to arrange a consultation.
About Thomas
Thomas J. Britt is managing director of Benchmark Wealth Management, LLC, with 20 years of experience in the financial industry. He specializes in executive financial planning, retirement planning, investing, as well as the management of trusts and endowments. Thomas is a Certified Financial Planner™ (CFP®) professional and holds the Master Planner Advanced StudiesSM (MPAS®), Certified Investment Management Analyst (CIMA®), and Chartered Retirement Planning Counselor (CRPC®) designations. He earned a Bachelor of Science in Finance from the University of New Haven, an MBA in financial technology from Rensselaer Polytechnic Institute, and a Master of Science in Personal Financial Planning from the College for Financial Planning. He is also a proud veteran of the United States Navy Submarine Force. Learn more about Tom by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.adviserinfo.sec.gov/firm/160192
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AR, CA, CT, FL, KY, MA, ME, MI, MN, MO, NH, NJ, NM, NY, OH, PA, RI, TN, WA. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a registered Investment Advisor. Private Client Services is an unaffiliated entity.
Rick Stout is honored to have been featured as a guest on the local radio show, “Meet The Expert.” On this episode, Rick shares his insight from historical financial evidence and tells you how to strategize to help get through this current situation. Listen now.
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary (AIF®) designation. He has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning and holds the Master Planner Advanced StudiesSM (MPAS®). He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. He also completed the Accredited Wealth Management Advisor (AWM®) program through the Estate and Wealth Strategies Institute at Michigan State University. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.iapd.com, searching with our company name or unique identifier, CRD # 160192. Past performance is not a guarantee of future results.
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AR, CA, CT, FL, KY, MA, ME, MI, MN, MO, NH, NJ, NM, NY, OH, PA, RI, TN, WA. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a registered Investment Advisor. Private Client Services is an unaffiliated entity.
In response to the COVID-19 pandemic, a new charitable fund has been established to provide financial support to the most vulnerable residents of Lyme and Old Lyme. The Lyme-Old Lyme Coronavirus Relief Fund will be managed by the Lymes’ Youth Service Bureau (LYSB), in partnership with the Social Services Departments of the two towns. Early donations have already been put to good use helping vulnerable citizens in both communities with essential needs such as groceries, fuel, diapers and assistance with rent.
Shortly after the fund was established, Benchmark Wealth Management announced it would match all donations on a one-to-one basis up to a total of $10,000. Asked by email why Benchmark had decided to make such a generous donation, Rick Stout responded, “Tom [Britt] and I live in Old Lyme and have raised our families in the Lyme-Old Lyme community. Doing good is a tenet of our business philosophy.” Stout and Britt are the partners of the company.
Stout continued, “Current events will impact everyone, so where and when we can help, Benchmark is committed to doing so,” noting, “Additionally, we are actively supporting area businesses and nonprofits and their employees personally. Small businesses and their employees, nonprofits, the self-employed and everyone working in the gig or tip-dependent economy is facing great uncertainty.”
He concluded, “Benchmark hopes to spur donations by those who are in a position to do so with our donation and challenge.”
All donations are tax deductible and can be made online at www.lysb.org/covid19.
Lymes’ Youth Service Bureau Director Mary Seidner comments, “Our communities are working together in unprecedented ways, and it is the hope that this fund will support our vulnerable residents on a path toward stability and recovery.”
Donors or residents with questions are encouraged to contact Seidner at mseidner@lysb.org or 860-434-7208.
Editor’s Note: Benchmark Wealth Management is located at 83 Halls Rd., Ste. 201, PO Box 525, Old Lyme CT 06371. For further information, call 860-434-6890.
As global markets continue their roller coaster ride due to fears surrounding the coronavirus, our most recent bull market officially turned into a bear market. But what does that mean? And are we on the verge of another recession like the one we had in 2008?
In light of all these concerns, today we’ll share what you need to know about recessions and bear markets. If you are worried about your portfolio, we understand and we’re here to help. Feel free to contact our office to get answers to your specific questions.
What Is A Bear Market?
A bear market happens when an overall market benchmark, such as the S&P 500, dips by 20% or more from its most recent high. (1) This is often accompanied by negative investor sentiment and more selling than buying.
It’s important to highlight that normal stock market volatility isn’t an indicator of a bear market. Normal dips and swings are necessary for long-term growth and shouldn’t be cause for concern.
What Is A Recession?
A recession is defined as two consecutive quarters of economic decline (emphasis on the word economic). They’re measured using factors such as the employment rate, gross domestic product, bond yield curves, and other factors independent of the stock market. (2)
Economists declare recessions retroactively. For example, the Great Recession wasn’t confirmed until November 2008—11 months after it started. (3)
Bear Markets Vs. Recessions: How Are They Related?
A bear market relates to the stock market. A recession relates to the economy. Contrary to popular belief, the stock market is not the economy. What drives the stock market is investor emotions—which, as we all know, can be fickle. As humans, we have a tendency to be overly optimistic when there’s no data to support our feelings, and pessimistic when data looks great.
Recessions are the complete opposite. Tangible factors determine the state of our economy. There’s no emotion involved. Which begs the question: Why do people correlate recessions and bear markets?
If you look back on history, recessions and bear markets have usually occurred around the same time. Of the last 11 S&P 500 bear markets we’ve had since 1957, 63.6% came after a recession. (4) The two go hand in hand, but they’re not the same.
Not even highly educated economists can predict a bear market or recession. There’s a lot of speculation that goes on in the news, but it’s just that—speculation.
What Should Investors Do?
The best thing to do as a long-term investor is to find an optimal portfolio that balances your comfortable level of risk and return. The actions you take in the stock market should be independent of whether economists think we’re entering a bear market or recession.
And as many financial experts have advised: Your 401(k) right now is like your face: Don’t touch it. Selling due to fear when the market is down locks in your losses and can do long-term damage to your financial future.
Speak with Your Financial Planner
Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party during times like this. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that are not driven by emotion.
We’re Here for Your Friends and Family
If you have friends or family who need help with their investments, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. Sometimes simply speaking with a financial advisor may help investors feel more confident and less concerned with the most recent market activity
The views expressed represent the opinions of Benchmark Wealth Management, LLC (“Benchmark”) and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.
Past performance is not a guarantee of future results.
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AR, CA, CT, FL, KY, MA, ME, MI, MN, MO, NH, NJ, NM, NY, OH, PA, RI, TN, WA. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a registered Investment Advisor. Private Client Services is an unaffiliated entity.
The number of Americans retiring has nearly doubled in the past 20 years with 10,000 people a day reaching age 65. (1) Are you getting close to that milestone too?
If retirement is on the horizon for you, then Social Security is probably on your mind. Over 48 million people received Social Security retirement benefits this January, (2) and no matter how much you have in savings, Social Security is no doubt an important piece of your financial future. That’s why it’s crucial for you to have a solid understanding of how your benefits work, especially because there are a number of decisions you will have to make regarding Social Security that can have a great impact on how much you will receive.
In this guide, we will answer the five biggest questions that everyone has about Social Security and discuss how to maximize your benefits.
How Are Social Security Benefits Calculated?
Your Social Security benefits are calculated based on lifetime earnings. The Social Security Administration (SSA) calculates your benefit based on your 35 highest earning years, with a minimum of 10 years of work required to be eligible for benefits. If you have worked less than 35 years, then your earnings will be calculated with zeros for the remaining years. All past wages are indexed to today’s wages in order to accurately reflect wage growth.
Once your average monthly earnings for your top 35 years are calculated, a special formula is applied and the result is your primary insurance amount (PIA). The PIA is the benefit you are eligible to receive when you reach full retirement age (FRA).
The actual benefit that you receive may not be your PIA. Your PIA will be increased or decreased depending on when you choose to begin receiving benefits. Taking benefits before FRA will reduce your benefit and waiting until after FRA will increase your monthly benefit. Also, starting at age 62, your eligible benefits will receive regular cost-of-living adjustments.
Spousal Benefits
Married people are eligible for benefits based on their spouse’s work history. The spousal benefit is 50% of the working spouse’s earned benefit. In order to receive these benefits, the working spouse must be at least 62 and have already filed for benefits.
If you are divorced, you may also be eligible to receive spousal benefits based on your ex-spouse’s work history. Your marriage needs to have lasted at least 10 years, you must be divorced for at least two years, and you must still be single. In addition, you need to be at least 62 and not eligible for higher benefits based on your own work record. Unlike spousal benefits for married people, your ex-spouse does not need to have filed for benefits in order for you to claim them.
When Can Social Security Benefits Be Claimed?
You can claim your Social Security benefits anytime between age 62 and age 70. However, when you choose to collect benefits will impact the amount of benefit you receive.
Early Retirement
You can start receiving benefits as early as 62 but your monthly benefit will be lower than if you waited longer. Your basic benefit is reduced a fraction of a percent for each month you begin receiving benefits prior to full retirement age. Retiring early can permanently reduce your benefit by up to 30%.
Full Retirement Age
Your full retirement age (FRA) changes based on the year you were born. FRA is 66 for those born between 1943 and 1954 and increases by two months for every year after that you were born until it settles at age 67 for those born in 1960 or later. If you wait until you reach full retirement age to begin collecting your Social Security benefits, you will receive the full PIA that you have earned.
Delayed Benefits
If you’re still working or don’t need the money immediately, you can delay receiving your benefits. Your benefit will increase by 8% for each year that you delay, with a maximum possible increase of 32%. You cannot delay and increase your benefit indefinitely, though. Once you reach age 70, you are required to file for benefits and can no longer increase your benefit by waiting.
When Is the Best Time to Claim Social Security Benefits?
While you are working, you can increase your future Social Security benefits by earning higher wages. Once you stop working, though, the only influence you have over your benefit is when you begin to take it. Your timing has a great impact on the amount of the benefit you will receive and should be carefully considered.
Social Security Statement
An important document that you will reference during the decision-making process is your Social Security statement. The SSA mails these statements out from time to time, but you can also access the same information by setting up an account on their website.
The statement will tell you your:
Estimated benefit if taken at age 62
Estimated benefit if taken at FRA
Estimated benefit if taken at age 70
Estimated disability benefit
Estimated family and survivor benefits
Medicare information
Earnings history
All benefit amounts listed are estimates and subject to change. They are calculated based on your date of birth and future estimated taxable earnings.
It is important for you to review your earnings history and check for accuracy. Your benefit is calculated based on those numbers, so any mistakes can affect your benefits. You should correct any errors as soon as possible.
Deciding When to Claim Benefits
Your Social Security benefits are calculated using complex actuarial equations based on life expectancy and estimated rates of return. They are not designed to encourage early or late retirement. If you live as long as anticipated, the total amount you receive over your lifetime should be about the same whether you claim it at age 62, age 70, or sometime in between. You will either receive the money as a smaller monthly payment over a longer period of time or a larger monthly payment over a shorter period of time.
The best time for you to claim your benefits depends on your personal situation and health. If you expect to live longer than average, your overall lifetime benefit will be greater if you delay claiming your benefits to increase your benefit amount. If the opposite is true and you see little chance of making it into your mid-80s, you would receive a greater lifetime benefit by taking it sooner, even though it would be a smaller monthly payment.
Once you decide when you want to start receiving benefits, remember to complete your application three months before the month in which you want your retirement benefits to begin.
How Can Married Couples Maximize Benefits?
Because married people have the ability to receive their own benefit or a spousal benefit, they have more to consider when filing for benefits. With the right strategy, married couples can maximize their benefits.
In the majority of cases, the lower-earning spouse should begin collecting benefits early while the higher-earning spouse waits as long as possible. That way, you can access the lesser benefit while maximizing the higher benefit.
Often, it is the husband with the higher benefit and the wife with the lower one. Women also tend to live longer than men. By following this strategy of waiting as long as possible to claim the higher benefit, you not only maximize the husband’s retirement benefit for use while he is alive, but it also maximizes the wife’s survivor benefit when he passes away.
Restricted Application
While it used to be a popular claiming strategy, the Restricted Application is now only available to those who turned 62 before January 1, 2016. If you were born before 1954, you can receive a spousal benefit at FRA even if your spouse is not collecting benefits. That way, you can begin to receive spousal benefits even while letting your spouse’s regular benefit continue to grow until age 70.
How Does Working Affect Benefits?
Working does not affect your benefits once you reach FRA, but it does before that. Only earned income, such as wages and self-employment earnings, affect your Social Security benefits. Income from investments, pensions, and annuities do not affect Social Security benefits.
When you are under FRA for the whole year, your Social Security benefit is reduced by $1 for every $2 you earn over $18,240. In the year that you reach FRA, your benefit is reduced by $1 for every $3 you earn over $48,600. Once you reach FRA, your benefit is no longer reduced no matter how much you earn.
Work With an Experienced Professional
If you already have a solid nest egg, you may think you can just ignore Social Security benefits or claim them whenever you want because you don’t need the money to live on. But remember, you earned this benefit by paying into the system and you can put it to good use, even if it’s not going toward paying your bills.
Think about it this way: Social Security is a guaranteed income stream that could pay out more than $1 million over your lifetime. Because of the significance and complexity of this decision, it is a good idea to consult with a financial professional before beginning the process.
Strategizing with an experienced financial planner will give you confidence knowing that you are doing everything you can to maximize your benefit. It is also important to take into account how Social Security fits into your overall retirement plan and goals. Our team at Benchmark Wealth Management is here to help. Call 860.434.6890 or send me an email at richard.stout@bwmllc.net to get started on making the most of the resources available to you.
About Rick
Richard W. Stout III is managing director of Benchmark Wealth Management, LLC, with 25 years of experience in the financial industry. He specializes in financial planning and asset management for individuals, families, and institutions seeking to build and monitor durable and sustainable plans for their financial futures. Rick is a Certified Financial Planner™ professional and holds the Accredited Investment Fiduciary (AIF®) designation. He has earned a Master of Science degree in Personal Financial Planning from the College for Financial Planning and holds the Master Planner Advanced StudiesSM (MPAS®). He obtained his MBA from Rensselaer Polytechnic Institute and his BA in Economics and Anthropology from the University of Connecticut. He also completed the Accredited Wealth Management Advisor (AWM®) program through the Estate and Wealth Strategies Institute at Michigan State University. He has extensive background experience in lending, credit review and analysis, and real estate and partnership management. Learn more about Rick by connecting with him on LinkedIn.
Additional information, including management fees and expenses, is provided on our Form ADV Part 2, available upon request or at the SEC’s Investment Advisor Public Disclosure site, www.iapd.com, searching with our company name or unique identifier, CRD # 160192. Past performance is not a guarantee of future results.
Securities offered through Private Client Services, Member FINRA, SIPC in the following states: AR, CA, CT, FL, KY, MA, ME, MI, MN, MO, NH, NJ, NM, NY, OH, PA, RI, TN, WA. (Securities-related services may not be provided to individuals residing in any state not previously listed.) Advisory services offered through Benchmark Wealth Management, LLC a registered Investment Advisor. Private Client Services is an unaffiliated entity.
The financial markets took a big dip early this week over fears about the spreading coronavirus, erasing gains from earlier this year. After the Dow lost over 800 points on Tuesday, it was down a total of 1,900 points in two days.
Investors are understandably nervous about their money and their health. If you are worried about your portfolio, you’re not alone. But during stock market volatility, it’s important to keep a level head to avoid financial mistakes.
Stay Calm
At times like these, it’s important to put current conditions into perspective. This is not the first time the market has taken a tumble and it won’t be the last. Declines in the Dow Jones Industrial Average are actually fairly regular events. In fact, drops of 10% or more happen about once a year on average.
Keep an Eye on the Situation
We simply do not have enough information yet to know how the coronavirus will impact the economy in the short and long term. It’s possible that the virus will soon be well-contained, and the markets will recover. But it is also possible that the virus will spread and impact global markets, which would lead to a full correction or even a longer-term recession.
It’s important to remember that markets dislike uncertainty. With so much uncertainty over how fast the virus could spread and the potential impacts, volatility right now is extreme. As we get more information, it is likely that day-to-day market fluctuations will decrease.
Play Dead
There’s an old saying that the best thing to do when you meet a bear market is the same as if you were to meet a bear in the woods: play dead. While easier said than done, successful long-term investors know that it’s important to stay calm during a market correction. We don’t know yet whether the coronavirus fears will translate into an official correction, but the risk always exists.
Market volatility has increased in recent years and the media can often make it seem like each episode is worse than the one before. In reality, volatility does not hurt investors, but selling when the market is down will lock in losses.
Remember That Your Portfolio is Diversified
We understand that volatility and market declines are stressful. However, we encourage you to keep in mind that while the stock market may be down significantly, your portfolio is made up of both stocks, bonds, and other assets that are designed to work together to decrease overall losses. It’s important to consider your specific portfolio, investment horizon, and circumstances when reflecting on economic events. If you have questions about your portfolio, get in touch with our office.
Review Your 401(k) and Other Accounts
Now is a good time to take a look at all of your investment accounts, including your 401(k) to make sure it is well-diversified. If you have not reviewed the investment accounts that we do not manage, get in touch with our office and we’ll take a look and offer recommendations to minimize potential losses.
Speak with Your Advisor
Whether you’re new to investing or an experienced investor, it’s helpful to consult with an objective third party. Human nature causes us all to act out of emotion when our accounts go down. As an independent firm, we put your best interests first. We seek to serve as a support system for our clients, helping them make informed financial decisions that aren’t driven solely by emotion.
We’re Here for Your Friends and Family
If you have friends or family who need help with their investments, we are happy to offer a complimentary portfolio review and recommendations. We can discuss what is appropriate for their immediate needs and long-term objectives. Sometimes, simply speaking with a financial advisor may help investors feel more confident and less concerned with the day-to-day market activity.
Disclosures
The views expressed represent the opinions of Benchmark Wealth Management, LLC (“Benchmark”) and are subject to change. These views are not intended as a forecast, a guarantee of future results, investment recommendation, or an offer to buy or sell any securities. The information provided is of a general nature and should not be construed as investment advice or to provide any investment, tax, financial or legal advice or service to any person.Additional information, including management fees and expenses, is provided on Benchmark’s Form ADV Part 2, which is available at https://adviserinfo.sec.gov/firm/summary/160192.
