Data & Research March 25, 2013

Paper Reveals Benefits of Delaying Social Security

New research from Morningstar shows that delaying Social Security benefits can be valuable for retirees.
Reported by

David Blanchett, head of retirement research for the Morningstar Investment Management division, looked at the tradeoffs of taking Social Security early (age 62) versus waiting to claim until age 66 or 70, assuming the benefits are invested throughout retirement. He found delaying Social Security benefits is especially valuable for females, married couples, retirees who expect to invest in relatively conservative portfolios during retirement, and retirees who have longer life expectancies.  

According to a report about the findings, two primary variables affect the outcome—how much one can earn on the invested benefits and how long the investor will live. An individual investor who takes benefits early (at age 62) must achieve returns around 7% to 8.3% or higher over their retirement in order to be better off than someone who delayed until full retirement age (age 66), assuming an average life expectancy. In contrast, an investor taking Social Security at 66 would only need returns in the range of 4.6% to 6.6% or higher to be better off than someone delaying until age 70.   

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An individual investor who takes benefits at age 62 and earns a 3% return on invested benefits, for example, would only be better off than someone who delayed until 66 if the person lived to about age 79. In contrast, an investor taking Social Security at 66 would be better off than someone delaying until age 70 if they only lived to about age 83.

 

(Cont’d…)

The research also found spousal survivor benefits significantly increase the potential benefit from delayed claiming ages. For example, if both spouses are the same age and the primary spouse takes benefits early, then dies, the surviving spouse would have to earn 9.3% or higher on the invested benefits throughout retirement to be better off than if the primary spouse had delayed benefits.  

Delaying Social Security is a much more attractive form of guaranteed income versus claiming early, investing the benefits and then using the proceeds to purchase an annuity at full retirement age. In order for an individual to be better off with the latter plan, he or she would need to earn 31.7% per year on the invested early benefits to eventually purchase a large enough annuity, given current annuity rates.  

The report is here.

 

 

Deals & People March 25, 2013

HighTower Expands New York Footprint

Mark Kravietz, principal of MK Wealth Management in Melville, New York, is joining the HighTower network of advisers.
Reported by

Kravietz comes to HighTower as partner and managing director, bringing more than 25 years of experience in financial services. He manages $300 million in assets for families, individual clients, businesses and nonprofits. His areas of expertise include asset allocation, liability and estate planning, and portfolio construction. MK Wealth Management brings special focus to educating and empowering its clients to make thoughtful financial decisions.

Before joining HighTower, Kravietz was with UBS Financial Services, where he was a member of the Global Circle of Excellence. He is a founding member of the Long Island Association for Financial Education, a member of the Investment Management Consultants Association (IMCA), a founding member of the National Association of Financial Advisors and a founding Registered Player Financial Advisor to the National Football League Players Association.

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Kravietz holds a bachelor’s degree in business from the State University of New York at Albany, as well as the CFP certification and CIMA designation from the Wharton School of Business.

HighTower is an adviser-owned financial services firm. MK Wealth Management is the tenth adviser team to join Hightower in the past year and the 37th team to enter into the partnership since the firm’s inception. The company is headquartered in Chicago and maintains corporate centers in New York and San Francisco and offices across the country. More information is at www.hightoweradvisors.com.

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