Meet Lisa, a 62-year-old office manager who is single and ready to retire. She’s saved enough money for her immediate needs and is considering waiting to claim Social Security in hopes of receiving a larger benefit. She knows the longer she waits to begin Social Security payments, the more she’ll get each month.
Her current projected Social Security benefits 1:
Claim at age 62 $1,925/month
Claim at age 70 $3,821/month
1Assumptions: date of birth 11/15/1963, current earnings $115,000, retirement dates 11/2023 and 11/2033.
Source ssa.gov
At age 70, Lisa's Social Security benefits are 98% greater than if she claimed early
Consider an annuity "bridge"
One strategy to help Lisa delay claiming Social Security benefits while creating a steady stream of income is a single premium income annuity with a guaranteed payment period. This type of annuity is designed to pay a fixed amount of income, with a specific start and end date.
Delaying your claim may not be right for everyone. Evaluate your claiming decision based on your retirement savings, investment strategy, your other sources of retirement income and your expectations for longevity. This flyer is intended for educational and informational purposes. Neither Global Atlantic, nor its affiliates or representatives offer legal or tax advice. This information represents only our current understanding of Social Security in general and is subject to change at any time. You should consult your tax or legal professional prior to making any decisions. For more information see ssa.gov.
A hypothetical example
Scenario A
Lisa begins collecting Social Security at age 62. She receives $1,925/month ($23,100/year) for the next 29 years.
Age 62
Age 90
$23,100/year
=$669,900
Scenario B
Lisa purchases an income annuity at age 62 for $156,511 with an 8-year guaranteed payment period.* She receives the same monthly payment from the annuity that she would have received from Social Security $1,925/month ($23,100/year). Then, at age 70, she can claim her maximum Social Security benefits $3,821/month ($45,852/year) and annuity payments would stop.
Age 62
$23,100/year
Age 70
Age 90
$45,852/year
=$991,181
*Assumes an eight-year period certain only annuity purchased with $156,511. Rates shown do not include any optional features or benefits, in which payments may be lower. Assumed client date of birth is 11/15/1963. Income received in excess of the premium paid in the contract is taxable as ordinary income. The Social Security benefit assumes an individual who has never been married and does not reflect potential increases of annual cost of living adjustments.
Additional considerations of an annuity bridge
An annuity offers guaranteed income payments that occur on a regular and automatic schedule. Based on how long you live and the income option you elect, the benefits you receive may be more or less than your premium amount.
Talk to your financial professional to see if an annuity "bridge" may be right for you.
This page is intended for educational and informational purposes about Social Security.
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