There are several ideas and several ways on how to not outlive your money especially during retirement.
There are two government backed programs that can help give better outcomes in total lifetime volume of retirement income dollars paid out that are either often misunderstood or overlooked and can help to not outlive your money.
The first is Social Security mistakes made when filing. There are over 2700 rules for Social Security and it is impossible for each taxpayer to know all of them. But there are several common mistakes people make when it comes to selecting the age to file for social security benefits that can result in hundreds of thousands of dollars in money left on the table. Waiting to age 70 doesn’t automatically give you or a married couple the maximum social security monthly benefit. There are many other factors that go into the equation. For married couples, the year the higher wage – earning spouse selects to start taking Social Security is important but equally the year the lower earning wage spouse selects to start taking benefits is critical as well and comes with different monthly benefits and rules between ages 62 to 67. Most people don’t know the caveats.
The year the higher earning wage earning spouse selects to start taking benefits needs to be a joint discussion between both spouses since it impacts, the lower earning spouse’s spousal benefit and possibly their survivor benefit which affects the overall dollars paid out by Social Security. People are also underestimating their life expectancies. Women who are 65 today have a one in two chance to living to age 90, and men, a one in three chance. Longevity needs to be an additional thought prior to starting to take social security. Taking social security early in retirement can bring in early income to a household but over the long haul was it the right decision? Medical issues aside, age claiming social security benefit combinations need to be known prior to deciding when to start taking social security benefits.
I created a video for a married couple aged 53 and 61 using RSSA, Registered Social Security Analyst, software that shows which age combinations gave the highest lifetime social security payout, the numbers will surprise you. An RSSA Roadmap report can generate a personalized report with multiple joint combination filing ages for married couples along with being able to show indexed earnings, adding future earnings to the mix while taking or not taking social security, along with calculated earnings penalties (often overlooked) when going over the maximum income threshold when working and taking social security simultaneously, prior to full retirement age, to help make the decision on how to maximize your monthly and lifetime social security benefits.
The other government backed program that can be used to increase your financial longevity is an FHA HECM Reverse Mortgage Line of Credit when used as a buffer to protect against down stock markets during your financial portfolio withdrawal phase. I have a few videos dedicated to this strategy on my YouTube channel. The HECM Line of Credit Helps Mitigate SORR (sequence of returns risk) video, Two Ways on How to Not Outlive Your Money During Retirement video, and How to Maximize Your Social Security Benefits with a Reverse Mortgage Line of Credit video, show how to overlay the HECM Reverse Mortgage Line of Credit on top of an existing financial portfolio to help protect it when market returns are negative. No restructuring of the portfolio needs to be done. The idea is immediately following a down market year, instead of taking an annual withdrawal from the investment portfolio, you draw from the HECM reverse mortgage line of credit instead and leave the investment portfolio alone and give it time to recover and get back into positive territory. The videos above highlight a case study that was published in a financial magazine and peer reviewed (a big deal) with positive results using the HECM reverse mortgage line of credit in this manner.
The HECM reverse mortgage line of credit case study improved an investment portfolio by over $500k over its lifetime and the social security case study gives an additional $247k in overall lifetime benefits just by knowing which age combination worked the best for that particular married couple based on their life expectancies. I am an experienced reverse mortgage loan originator as well as an RSSA and can generate reports for reverse mortgage scenarios and social security claiming options. Conventional wisdom needs to be challenged since people are living longer and the issue on how to not outlive your money is a real fear yet not enough conversation is being had in the financial community to address this. Hopefully these two options gave your food for thought!
I originate California reverse mortgages and have done so for over 12 years. Kevin Walton is also a Ventura County, California RSSA, helping people nationwide with all things social security.
Feel free to give me a call, email or leave some information on the form below if you have any questions or concerns.
Warm regards,
KW