I was watching a special on Olympic Athletes and when they asked the athlete what was the difference between them and all the other athletes that did not make the Olympics his response amazed me. He did not say he was a much better athlete, or he had gifts that others did not have, rather he said he was coachable. He went on to explain that with athletes at his level the differences were so small that any small advantage could be the difference between first and last place. He truly believed that because he was able to take what a coach saw as an area he could improve and work hard to correct small flaws made him the Olympic athlete that he was today. This got me thinking about what else in life could be improved if we listened to our coaches. I know that if I listened and applied all that my Doctor recommended I would be healthier and weigh less. I know that if I listen to my wife she will keep me from making the social mistakes that I am prone to make. If I listen to my boss I will have a better chance of a promotion. If I listen to my financial planner I will have a better chance of a secure financial future. The real question is why do we not listen when we know it is in our best interest. I wish I had a better answer than I don’t know. I specialize in Social Security optimization and have spent a great deal of time understanding how the system works and can coach people how to get more out of their benefits. For me, it is hard to understand why anyone would not want to know how to get more out of a benefit they had worked so hard for their entire life. I see the best athletes going to coaches even as they are at the peak of their profession. The same should be true for us. No matter how good or well prepared we think we are, a good coach can identify areas we can get better. For 99% of Americans, Social Security is the largest retirement asset, yet only 2% get the maximum benefit. In my book, that means 98% of people should hire a coach to improve their benefits. It is easy and I am here to help.
This week started with a series of 3 educational events.
The first was a pilot program sponsored by Municipal Benefits with the Town of Apex. Special thank you to Eleanor Green for working with us and gathering a great group of employees to learn about how to best use Social Security. We discussed how the variables such as age, work history, marital status and how long you expect to live impact how you should claim for benefits. At the end of the pilot program the overwhelming response was we need to be doing this every year. I take that as a positive for moving forward with other municipalities.
Next up was the second client event for Jolley Asset Management. The event was hosted at Benvenue Country Club in Rocky Mount NC. With a packed house, we discussed how to best use Social Security with your other assets and even had a great conversation about second marriages and the special provision that allows people over 60 to remarry and choose which benefit is best for them. I love providing these educational events for financial advisors and I think their clients like hearing from an expert on an important topic.
Finally, today I had the privilege of presenting at the Rockingham County Retirement Day. This event was sponsored by the county for their employees and featured topics and speakers familiar with the State Retirement, Social Security, State 401(k) plan and Estate Planning. This was probably one of the most engaging groups I have spoken with and they had great questions. At this event, we spent some time discussing the impact and traps of the Social Security leveling program offered through the state.
It is through events like these that I can help many people have a better understanding of how to leverage Social Security in retirement. After the events, they are all encouraged to visit my website to either review the material covered or share with a spouse or friend that was not able to attend. In all cases I am sure they now have a much greater understanding of the myths and truths of Social Security and once they get their analysis will be able to make an educated decision based on facts. In my book that is a win. Thanks to all three groups for making this happen. If you would like to schedule an educational event, contact me directly for details.
Well, it happened again. I was on Facebook looking at pictures of friends and trying to ignore political posts when a post came up about Social Security. This always intrigues me, so I opened the link and while I agree with some of their analysis it is not completely accurate. Then deciding to enter into the comments with some of my knowledge since I do teach on the subject I soon realized that many people do not want to understand or even have an intelligent conversation about how to solve the coming challenge. There are several ways to do this and in my classes, I go over these so if you want to know more they are free on the website, but what took me aback was the constant repetition of the lie that Social Security is a Ponzi Scheme. It did not matter to these people that when you look at the definition of a Ponzi Scheme it has several elements that are listed on Investopedia.com. Like any good conspiracy theory, there are a few pieces of truth. The one that is most commonly repeated is taking money from one generation to pay the next. This is an element of a Ponzi Scheme, but if that were the only criteria for defining it as a Ponzi Scheme then all pensions would fall under the same classification, but you never hear people referring to their IBM or GE pension as a Ponzi Scheme. In fact, you seldom hear state employees refer to their pension as a Ponzi Scheme. The truth is that you have to look at the rest of the definition to see that while it may get you several likes on Facebook to post comments like this it is not accurate. The first characteristic of Social Security is a high return for a low risk. Anyone that has looked at the actual return on Social Security knows that this is not true. The second characteristic is consistent flows regardless of market conditions. While Social Security does provide consistent flows it is actuarially calculated based on your own personal history and decisions. There is a characteristic of being not being registered, but neither are pensions. This next characteristic is a big one and that is that the strategy is unknown or too complex. While Social Security has an estimated 22,000 pages of rules, for most it is actually fairly easy to calculate if you know the formulas. This is the reason for software to calculate benefits. This is also similar to private pensions. The last two characteristics I am going to combine. They are a lack of paperwork and not being able to get your money back when you want it. Anyone that has dealt with Social Security knows there is easily accessible paperwork, now you may not get any help in optimizing it but they will certainly help you complete the paperwork. And as far as not getting your money at any time this is common in pensions and annuity contracts. All of this to say that while it might get you some likes on Facebook by claiming Social Security is a Ponzi Scheme it is simply not true. Social Security is complex and you do have to understand it before you make any decision. This is why I have the education on my website and why I provide independent analysis of benefits to help those that want to get the most out of their benefits. For those that think it is a Ponzi Scheme just keep collecting your checks until you die and then your spouse can collect. That is the reality and it is backed by the ability of our government to tax to make up the difference. Will Congress change this who knows but that is a topic for another day?
I recently saw an article that emphasized that you should have some magic number of assets saved up for retirement. While I agree that the assets play an important part in retirement planning, often they are underfunded and other saving objectives throughout life have a higher priority. What is missed in articles like this is that people often fail to take advantage of the elements of retirement that they can control. The timing of the coordination of these resources will have a significant impact on the longevity of your assets. For example, if someone chooses to retire at 62 and has insufficient assets for retirement they may be better off taking Social Security early, but if they live a long time will still run out of liquid assets. On the other hand, if they delay Social Security until 70 they will deplete assets even sooner to cover the gap while delaying Social Security. This delaying of Social Security may lead to greater cash flow later in life, but the problem of running out of liquid assets still exists. So, in this case, taking Social Security early is not a good option and delaying Social Security is not a good option and in either case, they do not have enough liquid assets to last a lifetime. What can they do? The third an often overlooked resource is to continue working. Then they can match the Social Security strategy with the assets to meet or exceed the expected mortality. While there is a number that will comfortably provide enough income to last a lifetime, it is not the norm and the majority of people will have to figure out how to get the most out of what they have and be strategic about using all their resources to their fullest potential. The reason I created Retirement Resource Management is to help people put all these resources together and educate them on the best path for retirement. Retirement is not a number but a plan of using what you have to the greatest potential. We are here to help.
We had a great event at Benvenue Country Club in Rocky Mount NC. At a lunch meeting, I had the opportunity to share how to get more out of Social Security benefits for a group of about 15 people. Special thanks to Jolley Asset Management for hosting this event. We discussed the common myths of Social Security, recent rule changes, how to use the remaining rules to their advantage, and how Social Security can impact their other resources in retirement. At the conclusion, we discussed the value of having the facts before they make a decision on when to take benefits. We let them know that we were available to run a custom analysis for them and most took us up on our offer. This is why I provide the education, so people can understand why haveing all the facts is so important for their future. If you would like to host an event in your area, just click on the tab on our website. We would love to help.