I do a lot of speaking engagements on the topic of social security. One of the first questions I ask the crowd is "please raise your hand if you have a pension, as opposed to a 401K plan or an IRA". Typically fewer than 10% of the participants raise their hands. Then I ask, "for those of you with your hands raised, how many of you have a pension that is guaranteed by the Federal Government, guaranteed to pay you as long as you live, provides spousal benefits, survivor benefits, children's benefits, caregiver benefits, divorced spouse benefits, disability benefits and payments that increase each year with inflation?". Suddenly even the hands that were raised come down. Then, much to their surprise, I tell them that "probably every one of you should have your hands raised. Why? Because it's likely that all of you qualify for social security, the exact pension plan that I just described.
It is arguably one of the greatest pension plans ever created and most people are unaware of it's potential value to them. In fact, if you were able to devise a filing strategy to maximize your eligible social security benefits, it would likely end up being your largest retirement asset, providing a level of lifetime income that may exceed your 401K or other retirement assets. In fact, for many middle income families, social security may pay out as much as $1 million or more in lifetime benefits!
Unfortunately, according to the National Social Security Association, LLC, over 90% of recipients receive less money than they are entitled to. This can amount to tens of thousands or even hundreds of thousands of dollars in lost benefits. There are a number of reasons for this but the primary reasons are as follows:
1. Social security rules are extremely complex.
2. There are over 2,700 rules that govern social security. A typical couple has over 567 possible filing strategies!
3. Social security staff are prohibited from offering advice.
4. There are very few professionals who specialize in social security planning strategies and who know how to uncover all your eligible benefits.
So, the next time someone asks if you have a personal pension, you now know to say that yes you do. Hopefully you will also be able to say that you will not be leaving any money on the table because you sought out assistance from a social security specialist and put together a filing strategy to maximize your eligible benefits.
Ash Ahluwalia, NSSA, CCSCA, MBA