For most people, the biggest financial retirement fear is outliving their retirement savings. A close second is healthcare costs. Thinking of Social Security as longevity insurance is advantageous and understanding how it integrates with your overall financial and retirement planning is critical. Unfortunately, relying on Social Security representatives for advice in these matters can become more hinderance than help.
According to a study from the U.S. Government Accountability Office, Social Security representatives routinely make mistakes in the application process, costing people up to hundreds of thousands of dollars. It's not that these representatives are bad at what they do – quite the opposite in most cases – but their job is not to be a professional financial planner. In spite of this, they often find themselves fielding financial questions from those who have not properly prepared to claim benefits. Social Security representatives should not be consulted for financial planning advice, because they do not know your overall retirement strategy or how your Social Security benefits fit into your plan.
Social Security benefits should be considered the foundation of your overall retirement plan , and there is no “one size fits all” category for claiming them. There are a few general guidelines you should follow. For instance, don’t leave money on the table by not using all of the options available to you. In addition, don’t be part of the 50% of the population that claims benefits early based on emotion. While it may make perfect sense in your situation to claim benefits early, it should always be approached objectively.
It’s important to know that if you claim the wrong benefit at the wrong time, it will always be smaller – and it’s forever. You only get one shot at claiming benefits, and it has to be right. There is a rarely used option to undo your decision within one year of claiming benefits, but you won’t even have to think about that option if you do it right the first time. That is why you should know your claiming strategy – to help the Social Security representative get it right.