PHOENIX — More Americans are aiming to retire in their 50s, but they often overlook when they choose to activate their Social Security benefits.
Everyone’s financial needs are different and their needs in retirement are just as situational.
Stewart Willis, President of Asset Preservation Wealth & Tax, said too many take Social Security “for granted” and don’t think of potential taxation on it and cost of living adjustment.
“I still think that there’s some potential exposure for Social Security tax in the future, and that has to part of your (financial) plan,” Willis said on a recent episode of The Asset Preservation Hour.
Besides tax onset, Willis said married couples also have to keep in mind their age gap because one that is significant enough may change whose Social Security benefits should be activated first. Willis compared this to “pawn sacrifice” in the game of chess; you should use the smaller benefit before the larger one “so that that money will continue to be there for the surviving spouse.”
Social Security benefits have historically increased by 2.5% each year to keep in step with inflation. However, Willis said people should not count on this as a “linear,” unchanging phenomena. Rather, they should brace themselves for shifting markets.
Beyond Social Security: Financial literacy is for the whole family
Somewhere between $85 and $100 trillion is estimated to be transferred to the next generation within 30 years, according to The Asset Preservation Hour.
Thus, those on the receiving end need to be well-informed in how to handle such financial responsibility.
Willis said no one is too young or has too little money to learn about making wise financial decisions. Any client of his or his company shouldn’t hesitate to include their children in the conversation.
“I want to make sure that when you’re gone that your kids are educated in decision-making, and we’re going to groom them for the next 10, 20, 30 years,” Willis said. “We are looking to build a generational wealth company. … Your surviving children will be fine because you laid it out ahead of time.”
Other than including your children in financial discourse with a trusted advisor, Willis suggested adopting “long-term thinking,” such as determining whether you should pay off your house or continue investing in markets.
“If we could get that long-term thinking in the family, oh my gosh, that’s how you build the generational wealth,” Willis said.
Claim a free portfolio review by Asset Preservation Wealth & Tax online or call 877-573-8437 for more information.
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