Podcast Episode 274: Mailbag – Social Security, Combining Finances, & Annuities

Retirees will come across all types of scenarios that can impact their finances, and we tackled a few of those on our latest podcast.

Eric Hogarth, CFP®, will take a few questions from the mailbag today that touch on Social Security, combining finances later in life, and annuities.

The first question we have today comes from someone who is just a few months away from retirement at age 69 and wants to know if it’s worth waiting until 70 to claim Social Security. It’s going to depend on how much you have saved elsewhere. The initial inclination would say to wait since you’re so close already. The one thing to keep in mind, however, is that Social Security doesn’t get passed on when you’re gone like the other money in your account so it’s best to avoid drawing down your own accounts if there are other options available.

Our second question on the show today comes from someone who is a relationship after divorce and starting to have conversations about combining assets. Once you’ve been doing it on your own for some time, does it make sense to combine finances? Well, we see these situations quite often and there are pros and cons for both sides. We will tell you about a few of those on the show, but getting married usually provides greater benefits financially.

The third question we address is all about explaining annuities. There are a variety of options that serve different purposes. The traditional annuity is essentially a pension, meaning you give money to an insurance company and they guarantee income payments for rest of your life. The problem is they don’t always pay that much money because they’re based on life expectancy and interest rates aren’t great. The big fear with annuities is that once you die, that money is all gone.

Then there’s a deferred annuity, which means you put money in and defer payments for later. The good thing about this one is that the money left over after you die gets passed along. Within the deferred annuity category you’ll find variable and fixed types. The key thing to know is that variable annuities are securities so they have fees and risk of losses. The catch with the fixed annuity is that you likely won’t make as much money, but it’s the safe option.

It would take too long to try to go through all the details concerning annuities, but we’re happy to sit down with you and explain the different options if it’s an investment you’re considering. Take advantage of our Money Map review process to get started.

0:22 – Mailbag question on starting Social Security

3:08 – Mailbag question on a second marriage and finances

4:44 – Mailbag question on annuities