How would you like to have clarity, confidence, and control in your financial life starting in 2022? To help you begin on the right foot, I’d like to review a few items in our most popular whitepaper, Retirement Plan Checklist. In that whitepaper, not only are there several questions that can be answered with a simple yes or no, but you should also be able to answer yes to all the questions. If you can’t, that’s a sign that you may need help with your retirement plan. There’s also an age-based timeline of items you should be doing as you approach retirement at specific ages and even through retirement.


Want a copy of the Retirement Plan Checklist? Click HERE to download your free copy.  


Once you have your copy of the whitepaper downloaded, flip to #29 on the checklist. In case you didn’t download the paper, it says, “I understand that Social Security income is tax-free unless I disqualify myself.” I think this question is critical. When it comes to Social Security and taxes, it’s been my experience that many people don’t truly understand how this works. It is tax-free; however, many people disqualify themselves.


When you begin taking Social Security, it is 100% tax-free. You make it taxable by your decisions while you were in the accumulation phase. The truth is you may not have to turn on the taxable benefit of Social Security if you make the right decisions. My Advisors and I have put together many retirement plans where people can spend $100,000, $110,000, or $120,000 and still keep their modified adjusted gross income below the $44,000 limit or the $32,000 limit where Social Security starts to become taxable. A particular calculation determines how much of your Social Security is taxable. If you do the income sourcing right, meaning if you’re spending from the right buckets at the right time, you can get more spendable income. That’s going to show up on your modified adjusted gross income, and that’s how you can have higher incomes but not have your Social Security become taxable. If done correctly, the net savings can be highly significant.  


If you are thinking you need to turn on your Social Security at 62, 66, or whatever the age is that you need to begin taking benefits, don’t forget about all the other implications that belong with it. What some people misunderstand is that the average couple who is 62 years old will have somewhere north of 600 different iterations on how they can claim their Social Security. The difference between the best and the worst claiming strategy can often exceed $100,000 of total lifetime income with the same earnings history and same life expectancy.


What we do for our clients is take all of their Social Security data, plug it into our system, and show the “600” different ways that you can claim your Social Security. Together, we will discover which one will give you the most income over your lifetime. Next, we start plugging those different iterations into the financial plan created. At this point, we can see which one of those Social Security claiming strategies gives you the most benefit from Social Security and does it in a way where you pay the least amount of tax possible. That’s what we call “Comprehensive Financial Planning.” It’s important to realize that it’s not only the most income you can have but also the best output. What I mean by that is, if you couple that with income sourcing or different buckets, you could end up with not only $100,000 more of income over your lifetime, but you might end up with a significant amount of additional wealth at the end as well. Just prioritizing where you’re taking the income is commonly overlooked. People tend to believe that everything is a standalone and analyze it as though it’s in a vacuum and it’s not. Everything needs to be coordinated and integrated together. If you don’t do that, it’s highly probable that you may overlook something and miss out on some opportunities.


Another important question on the Retirement Plan Checklist is #18. It reads, “My retirement plan includes calculations to determine when my spouse should start taking Social Security and if they should take spousal benefits first and defer to age 70 to maximize their benefit.” Numerous different strategies may be available, and if people aren’t considering those, they may leave money on the table. That goes back to the comprehensive planning piece. People may not even know about those options where one spouse defers to a later date while the other spouse starts taking Social Security benefits now. For example, let’s say both spouses are the same age, but one had a higher income than the other spouse over their working career. The exciting thing is that the surviving spouse gets to keep the higher of the two Social Security benefits. However, if that isn’t factored into your retirement plan, you may be overlooking something. In other words, if the couple is 66 years old and the spouse that was the higher wage earner deferred until the age of 70 while the lower wage earner took it at 66, what could happen is upon the death of the first spouse, the surviving spouse could end up with a lot more Social Security income coming out of that. Now, if you compare that to both spouses taking it at 66, it may be tremendous because, in the first scenario, they will get the compounding effect of the cost-of-living increase, plus receive an 8% per year guaranteed increase from 66 to 70. That’s a significant number! Additionally, you can quantify that number for people and show them exactly how it can fit into their overall plan.


Often, people come to our office and want to give up on that spousal benefit piece. But if you do that, you lose that money, and you can never get it back. It’s imperative to make sure that you’re doing all of these things, but that’s where our Guided Retirement System (GRS) is so valuable. The GRS process includes having long conversations with people where we’re putting them into a position where sometimes, for the first time, get some real clarity to their overall financial situation. That, in turn, helps to give them confidence in their financial position and control over what’s going on. The end goal of a retirement plan reached through the GRS process is clarity, confidence, and control. That’s what Osiwala Financial Group wants people to enter into 2022 with.


Ready to take that first step? Schedule a no-obligation, free consultation with one of our Osiwala Financial Group Advisors by calling (248) 828-8000 or clicking HERE. We can meet by telephone, virtually, or in-office. Make 2022 the year you get your financial future planned out, so you don’t needlessly worry about running out of money during retirement. Not ready to take that step? Download our Retirement Planning Checklist and go through the questions to see if you have missed a step in your retirement plan.