Welcome to the Exploring Your Retirement with Willowfinch Series, where we’ll be going over all of the information, dreams, and numbers that can make your plans for “What’s next?” get you somewhere you actually want to go! You’ll see a list of the other posts in the series at the bottom of today’s blog.
Before we get into the whats and how-tos, remember that we’re not financial advisors or giving any specific recommendations or advice here. We’re going through the topics that we’ve found helpful when gathering all of these thoughts and showing how they pair up with your Willowfinch account dashboard to get you the most personalized and helpful data possible with our tools and resources. We always recommend getting insight and advice from financial professionals!
It’s not every day that Willowfinch’s founder, Andrea, goes through a literal once-in-a-lifetime milestone like applying for Social Security. And since that’s one of the big things Willowfinch customers are planning for or experiencing as well, today’s blog is a quick sit down with her to find out more about how it went.
We talked about how she felt through the process, any surprises, and her biggest tip for anyone headed toward the process soon:
Q: You recently signed up for your Social Security. How did you feel about the process itself?
It was so easy! It completely flummoxed me. I’m a US citizen who was born in the US and had a Social Security card, a passport, and enhanced driver’s license while applying, so I know that it may be more complicated if someone has different life experiences or current situation. But my biggest feeling about the process was surprise at how fast it was.
I think the hardest thing was finding out about the “My Social Security" website at www.ssa.gov. Once I knew about it, creating the account was very simple. Then I was able to keep up with notices about what benefits I was qualified for and when.
In all, applying took about 5 minutes to get it done once it was time to get started. I thought I was going to have to run to the Social Security office and all kinds of running around like it had been when we helped my mother through her process years ago.
Q: So is that what you expected before you started the process? What kinds of things had you seen other people say?
Yeah! Everyone had talked about having to go down to the Social Security Office to get signed up. And that’s not that huge of a deal, but you may wait an hour or more before getting to the front. Even then, if you don’t have everything sorted and ready it can get dicey.
I don’t think many people are aware that My Social Security exists, but you definitely want to sign up for that. You can find that in our resources, along with other tools to help with your retirement planning!
Q: Where was this step of applying for Social Security in your retirement planning? What did you do before? What comes next?
One of the weird things is that I didn’t start thinking about when to apply until just recently. Once I started, I found out that I can’t apply for my Social Security earlier than 3 months before my birthday. Planning for your retirement comes with a lot of deadlines and starting dates, from medicare starting at 65 to when you’re able to apply and draw Social Security, and more. It’s not always easy to find those cut-offs, either, so find an expert to help you if you need it!
A key part after signing up for us was making sure the other small, but important, steps were handled like Advanced Designation of Representative Payee. So that’s what we’re tackling now.
Q: Is there anything you would do differently to make things a bit easier?
No, I filed just under three months before my birthday because I was anticipating all kinds of hiccups and delays but it all went so smoothly and quickly! I was honestly a bit over-prepared when it came down to it. But that isn’t a problem!
Q: What kind of questions did you and your hubby discuss together before and during the process?
We looked at what our possible monthly payments would be drawing down at different ages. We worked out the math to see what pros and cons there were to each option. Our main discussion was whether we care about optimizing for certain things or if we’d rather take something that was earlier, that kind of thing.
So we decided we didn’t really care and it wasn’t worth waiting 15 years to get the most out of the payments. When we took that info to our financial advisor, he told us that drawing earlier was better for our overall retirement income! That was because our other investments would have more time to compound before we needed to tap into them.
We also looked into details like spousal benefits and things like that. We’re still looking at some of the follow-up now.
Q: What was the weirdest bit or step you came across?
Well, one thing I learned was that each year the benefits can change. So what you think you’d qualify for may shift over time. I wasn’t really aware of that going in and it’s an important thing to know. Some changes can be because of government policy and others will be influenced by things like your top earning years. I knew that the age of drawing down would impact the final payment amounts, but not these other things.
I had also never really thought about how much drawing our Social Security early would relieve pressure on our 401K income. That was a nice bonus!
I didn’t run into this, but I had two friends who were just shy of the 40 quarters of work that you need to qualify. That would be so frustrating to find out that late into the process! That’s why the information on the My Social Security website can be such a lifesaver.
Q: What would your top tip be for people getting ready to handle the Social Security process?
Get your My Social Security account access set up and going. That made the whole process move quicker than we could have possibly guessed. Plus, there are all kinds of helpful tools like a chatbot helper, seeing how much your earnings are, what your theoretical payments would be, and finding out whether you have enough qualifying working quarters.
It also played a huge role in our discussion with our financial advisor about our plan to retire early because we had at our fingertips all of our statements and key information about benefit amounts, taxes, timing, and other details. We could all look at it while talking, when he wouldn’t usually have access to that without us being able to share it in real-time.
You’ll still have things to get ready and submit, but it really changes the whole process.
Q: Any final tips or thoughts for us?
So you know what to expect, the whole process had three steps: You submit your application. They let you know it’s received. Then you receive a note that it’s in queue. They’ll let you know what office will be handling it and when the review is complete. Eventually, they send the snail mail confirmation.
Finally, just remember that once you draw there will be deductions that will happen, plus taxes. You already have a taxable component with your federal taxes. Plus, depending on which state you live in Social Security can be considered taxable income for state taxes.
That’s where the Willowfinch tool’s modeling of state taxes based on your personal retirement income plans can be so informative. There are all sorts of rules that states can have about who and what does or doesn’t get taxed for Social Security, so that can get frustrating without the right information.
Ready to get started?
Even with a smoother process available online, information, discussions, and planning are key when applying for your Social Security. The short process plays a huge part in your income, options, and experiences for a long time, too. It was important to the Willowfinch team to add some behind-the-scenes insights and stories to something that important!
Take Andrea’s story and tips and grab a few minutes to sit down and think about what you could discuss, gather, think about, decide, and do as you get ready to apply for your Social Security. Or, if you already tackled this process too, head over to our social media and share your own tips and thoughts!
Don’t forget to sign up for your free Willowfinch account to get access to all of our tools, data, and personalized insights and predictions to help you start getting things done!