Video instructions and help with filling out and completing Where Form 8815 Filing

Instructions and Help about Where Form 8815 Filing

If you're wondering what the best age is to file for Social Security you've come to the right spot because I'm gonna give you a few things to think about that no one else has you know trying to figure out when you should file for Social Security perplexes a lot of people there's data that suggests everyone should file early then there's other data that suggests everyone should file later and it just leaves individuals really confused and I know this because it's the number one question that I'm asked if you look at what Americans file for Social Security they haven't gotten this figured out yet in fact nearly 60% of all Americans filed before full retirement age around 30 percent filed at full retirement age and 12 percent file sometime after for retirement age what's interesting is that those that file before full retirement age the vast majority of those are simply filing at age 62 the earliest age they can and there is no way that just filing at the earliest age possible was right for nearly half of all 62 year olds there's enough data on retirement planning to no that's not right and there's a reason individuals do this and we're gonna cover that in just a moment but first let's go back and look at how filing age reduces or increases your benefit amount so let's assume that age 67 is your full retirement age that's when you can get 100% of your benefit if you file at 62 you're going to get less around 70 percent of your benefit and you'll see that benefit increase all the way back up to your full retirement age and then if you file after your full retirement age you'll get slightly more than what your full retirement age benefit was it's increased by 8 percent per year all the way up until age 70 so then why are so many people making this bad decision to file at the earliest age possible there's a term that behavioral economists use called hyperbolic discounting it's a cognitive bias where individuals are willing to receive a smaller reward to day instead of a known larger reward later and it's more pronounced as the reward gets closer for example imagine you are offered $50 today or $60 in one week when they did the surveys they found that most individuals would say I want my $50 now thank you I don't want to wait a week because it may not be there however when they changed the question and said would you rather have $50 in a year or $60 in a year and one week most of the individuals responded and said oh you know what I'll wait the 53 weeks and what they're thinking is I've already waited a year what's another week and this hyperbolic discounting is very easy to observe in general retirement planning you can build the perfect retirement income plan for someone but as that date gets closer things start to change and it's because those rewards are getting closer so while we all like to believe that we can make decisions based on the facts and not emotions when it gets right down to it your emotions can take over and get you to make a decision that is not optimal for you and that's why we're seeing so many individuals filing at the earliest age possible but now that you understand that you may have this predisposition to file as early as possible you can arm yourself with a fax on when you should file and the first thing you need to know don't use a break-even analysis this old-school approach to figuring out when you should file only takes into account your life expectancy and completely ignores the other factors that should be part of a great filing decision now for years this was the accepted method of determining when you should file in fact the Social Security Administration had a break-even analysis on their website thankfully they've since taken that down but this analysis would simply look at cumulative benefits for filing at the various ages and at what point do those intersect so for example if you compare filing at 62 versus 67 you can see that there is a point where those two lines intersect and that's at about 878 so it was easy to run this analysis and say okay I think I'm gonna live longer than 878 so I'm gonna wait till I'm age 67 to file and the same could be said for filing at 70 versus 67 in that case the breakeven is generally around 82 but the question this break-even analysis answers is what if I died early a real analysis to determine what your filing strategy should be also asked the very important question what if I live longer than expected when I'm advising clients on Social Security strategy there are 12 factors that we include to determine what the right strategy should be the first is gender then marital status or statuses contribution to income what are the children's ages are there any disabilities with the children with yourself what's your health like what's your spouse's health what your spouse's age are their other assets what kind of other income streams do you have what is your tech scenario look like and are you still employed understanding those things can help you make the right decision now there's a lot of research that suggests filing later is the best option now some articles and researchers will even go so far as to say it's always the best option and mathematically you could potentially make the case for that the vast majority of the time but there are some cases who are filing early is much more beneficial so let's take a look at some cases where it's in your favor to file earlier and then we'll look at some