Your clients who will be turning age 66 this year probably know they are eligible to begin receiving Social Security retirement benefits without regard to their work earnings. For those who start benefits earlier than age 66, the 2012 wage limits are $14,640 until Jan. 1 of their 66thyear, and $38,880 from January through their birth months.

|

As the 66th birthday approaches, let clients know that two trends are working to make delaying the start of Social Security benefits more attractive. They are: 1) increased longevity, because the longer people live, the longer they can receive Delayed Retirement Credits (DRCs); and 2) low interest rates.

|

For anyone who attains age 66 this year or later, DRCs permanently add 8 percent per year to retirement benefits, on top of annual Cost of Living Adjustments (COLAs). The 8 percent increase was actuarially determined based on how long Americans lived in the past, and also the discount rate required to fund future benefits. With 10-year Treasury yields (the discount rate) now below 2 percent, it's worth reminding clients that the 8 percent annual DRC has been locked into U.S. law for years and has not changed to reflect lower interest rates. For clients who are in excellent health, it could be a bargain to delay the start of benefits. For more on this subject, see: http://www.ssa.gov/retire2/delayret.htm

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and BenefitsPRO.com events
  • Access to other award-winning ALM websites including ThinkAdvisor.com and Law.com
NOT FOR REPRINT

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.