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article imageOp-Ed: Those entering retirement should know Social Security options Special

By Jonathan Farrell     Aug 17, 2013 in Business
Sonoma - As the baby-boomer generation goes into retirement, they will need to know some of the important details about Social Security Benefits, says Kevin Hillburn of The Prudential of northern California.
He was a guest speaker of Daren Blonski,of the Edward Jones Investments firm of Sonoma. Blonski had invited Hillburn to speak on Social Security options and what people must know before they enter retirement. The subject is one of several topics Blonski has presented to the community, strictly as an outreach free of charge and not a sales pitch.
Social Security benefits are the most common of all retirement benefits that most people will receive outside of any pensions or Individual Retirement Accounts (IRAs). "People must know what their options are or they may risk forfeiting as much as a 25 percent reduction in their SSA benefits," Hillburn said.
Just before Blonski introduced Hillburn to the-over-a-dozen gathered at the Sonoma Valley Chamber of Commerce that Thursday morning, he explained. "As I see it, Social Security in a sense, has three stages to it; the accumulation stage (which is working, earnings, savings), the distribution stage (using your accumulated resources during retirement) and the legacy stage (what you wish to leave behind in a trust or your will)," said Blonski.
It was mentioned to the audience by both Blonski and Hillburn that many people take very little time going over their statements from the Social Security Administration. "I have to be honest," said Blonski, "the details and rules of Social Security whether it be about retirement or disability insurance can be very confusing. I often will read and read again the material and say to myself, 'what are they saying?'"
Hillburn agreed the information provided to the public by the SSA can be very confusing. And, as he pointed out, "Don't expect the SSA to send you your statement of benefits as they did in the past' everything is on line now." Yet, Hillburn stressed and reiterated that people considering going into retirement should know some basic facts.
"I believe that in retirement there is the 'Have, Need, Gap' aspect, and this applies not just to SSA benefits but to all retirement plans and forms of assets," said Hillburn. From his experience speaking to many people on this topic of SSA retirement benefits, he asks them what do they think they will need for retirement?, "90 percent of people don't know how to answer that question," he said.
Financial advisor Daren Blonksi of Edward Jones Investments hosts monthly talks on subjects regardin...
Financial advisor Daren Blonksi of Edward Jones Investments hosts monthly talks on subjects regarding investments and retirement plans. All of his outreach in this effort is strictly to inform the community and is free of charge.
Hillburn explained further that typically the average person looking at retirement can tally an overview of the amount of their assets, but they fail to understand what their actual needs are to live comfortably and most importantly, what 'the gap' will be in income/resources, that are specific to their retirement goals.
"If you don't know how to answer the question and are afraid to face it, then no financial advisor can help much," said Hillburn. "Know what your particular gap is with regards to income/resources for your retirement goals," he said.
With regards to investing, such as buying stocks, etc. "understand if you can really afford to take financial risks," he said.
Hillburn also pointed out that usually people have varying views about Social Security. Some might see SSA retirement benefits as charity, which it is not. Just about everyone pays into it and money is automatically taken out of paychecks that goes to SSA benefits. Others think of it as limited and still some think it is mostly about the individual. "SSA benefits is really a collective benefit," he said. Sure an individual pays into it, but SSA benefits are also dependent upon others.
 It is important that you know what your retirement options are and that you understand the details ...
"It is important that you know what your retirement options are and that you understand the details of Social Security benefits," said Kevin Hillburn of Prudential. He was a guest speaker at Daren Blonski's talk on Social Security options, held at the Sonoma Valley Chamber of Commerce on Aug. 15.
When the question was asked from the audience, "what about the notion going around that Social Security is broke?" Hillburn replied, "The issues with Social Security on that can easily be fixed, if officials are eager and willing to do so." Of course that is another topic by itself.
Yet the reality that SSA benefits are collective not just individual is important in understanding how the system works. And, following the particular logic it presently operates on is one thing people must know in order to make good decisions.
Which then brings up the subject of spouse benefits. Married couples need to calculate what they need to retire as a couple. SSA has specific rules about survivor's benefits and how much a spouse gets when widowed or divorced upon retirement.
Blonski also included information from Edward Jones Investments and how important it is that people look through the "Retirement LENS." That acronym stands for Life-expectancy, Employment, Need and Spouse."
On average, women outlive men. And if the probability is there that at some point one or both spouses will need some form of "long-term care" then that also must be included in the retirement outlook for a couple looking at their retirement.
According to Hillburn, basically people should know that, "if you take your SSA retirement benefits early at age 62 and not at your Full Retirement Age at which is age 66, you can risk losing out on your full SSA retire benefit amount."
Hillburn explained the longer you work the more benefit amount you will receive than if you retire early. Typically, according to Hillburn, over 70 percent of all people take retirement early. And, among that percentage, mostly are men. With regards to spouses, it is the spouse with the highest SSA that the survivor when widowed gets and SSA has rules about that. Still this must be reviewed and understood by retiring couples. It is important to know the distinctions between "spousal" and "survivor" benefits. SSA has rules for each of them.
He also noted that some people say that they will continue working when they retire early. The down side to that is as Hillburn noted, "SSA has a earning threshold for retirees who take retirement early and continue to work." And, when a person surpasses that earning threshold then SSA will reduce the amount of monthly SSA retirement benefits.
Hillburn advised that if a person can manage, it is best to take retirement later after reaching the FRA point which is age 66, rather than earlier. The current SSA rules are in one's favor and as he said, "FRA point is neutral ground."
For people considering early retirement by age 62, Hillburn recommended that people consult with a financial advisor who knows the rules and regulations of SSA retirement benefits very well. Blonski noted there are web sites and blogs out there that can help.
As Hillburn concluded his talk he said, "as for benefits, people need to take action and spend the time going over all the information and understand what their options are."
To learn more about Social Security benefit options visit The Prudential web site.
And, Edward Jones Investments also has information about Social Security retirement benefits at the Edward Jones web site.
To learn more about how much a person might receive in retirement benefits, Social Security Administration has a web site that can help. Go to the Retirement Estimator page.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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