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Ed Meek
CEO/Investment Advisor

Edge Portfolio Management


State: IL

At Edge, a low client to advisor ratio allows for personal and customized service for each individual.  Our goal is to work as a team for each client to provide not only portfolio management but wealth coordination and financial planning.  We make every effort to have frequent communication with our clients and to provide timely response to calls and emails.  I also enjoy spending time with my wife and three kids, playing and following basketball, playing golf, and participating as an advisory board member for Breakthrough Urban Ministries.

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Maximizing Social Security Benefits Critical for Retirement Income: White Paper

"For many, Social Security will become the centerpiece of retirement income"

| BY Donald Liebenson

Misunderstanding and misinformation about social security result in costly mistakes that prevent retirees from maximizing benefits, according to a new Prudential white paper.

Not having enough savings to sustain one’s retirement years is the biggest financial fear for retirees, according to a Millionaire Corner survey of affluent households conducted last May.

With the transition from traditional defined benefit pensions to defined contribution plans such as 401(k)s, post-retirement risk has shifted from employers to the individual, which makes maximizing Social Security benefits more critical than ever, Prudential notes.

Social Security is an important component of total retirement income, but most senior citizens lack a full understanding of the system works and are unaware that different claiming strategies can have a significant impact on their Social Security income, an AARP study released earlier this year found.

The Prudential white paper identifies four common mistakes that retirees make about Social Security:

·         “Underestimating the real value of Social Security”

No retiree knows how long he or she will live, and most risk outliving their retirement income. Social Security is a hedge against this so-called “longevity risk.” For many, Social Security will become the centerpiece of retirement income. “Rather than ignoring this retirement resource,” Prudential encourages, “ we should embrace it” rather than ignore it.

·         “Rushing to collect, the regretting the reduced benefits for the rest of your life”

Retirement age has risen to 67 for those born after 1959. Retirees often apply for Social Security benefits earlier. “Most certainly didn’t stop to think that, once reduction penalties as well as foregone Delayed Retirement Credits and cost of living adjustments (COLAs) are factored in, they could have potentially doubled their initial payments if only they had waiting until age 70,” Prudential states.

·         “Not understanding the various ways married couples can integrate their benefits”

Between spousal benefits, worker benefits or survivor benefits, the different types of retirement benefits for which married spouses might be eligible is perhaps the most confusing and off-putting aspect of Social Security.

·         “Getting blindsided by the ‘Tax Torpedo’”

“Individuals for the most part understand that they face ordinary income taxation of their 401(k)/IRA withdrawals in retirement,” Prudential notes.. “Yet the tax situation is often worse for the retiree than expected. Once a very low income threshold is met ($34,000 for singles and $44,000 for married couples), every dollar received from an IRA causes up to 50 percent of a Social Security dollar to become taxed as well. At a second threshold, up to 85 percent of a Social Security dollar will become taxable. Assuming a 25 percent federal tax bracket, this creates a marginal tax of 46.25 percent on IRA dollars. Applicable state taxes may push the marginal tax rate to over 50 percent. This situation may get worse if ordinary tax rates increase in the future.”


You can read the entire white paper here.

About the Author

Donald Liebenson

Donald Liebenson writes news and features for Millionaire Corner. He has been published in the Chicago Tribune, The Chicago Sun-Times, The Los Angeles Times, Fiscal Times, Entertainment Weekly, Huffington Post, and other outlets. He has also served as a marketing writer for Chicago-based Questar Entertainment and distributor Baker & Taylor.  

A graduate of the University of Southern California, he is married with a college-age son. He also writes extensively about entertainment.