John Post was born a few years after World War II ended, and just at the start of the baby boom. He has spent his entire career in education. As a high school administrator, his workday begins at 7 a.m., and some days-after a school event-does not end until 10 p.m. While he's in decent health and does his best to eat right and exercise, he suffered a heart attack a year ago and had to endure a triple-bypass surgery.

Post (not his real name) is now 62-years-old and will have to retire one of these days. Responsible for educating students for several decades, he will soon have to call it quits as a school administrator and graduate to the next phase of his life.

While he hopes to return to the classroom and teach part-time after retirement, Post also has a list of personal items he would like to accomplish in this stage of life. So his time is important, but so is continuing to work and receiving extra income.

Post didn't consult with a financial planner when he was making decisions about his retirement. He's always had some sort of a plan in mind, but a loosely defined one. And now he wants to make sure he doesn't outlive his retirement income. And that means-despite whatever else he wants to do-he'll have to work a bit longer and avoid collecting Social Security too early.

Does any of this sound familiar when dealing with your own clients?

Baby boomers are famous for creating a lot of changes in society. As they aged, society conformed to their needs in many ways. Now, with improved health conditions, an increased standard of living and major medical advances, they are living longer than ever before. They're also in the workforce longer than ever before. Some are working longer to keep active, while others continue working because of the benefits. But many people-like John Post-are also working longer to make sure something is left after they're gone.

A majority of Americans collect their Social Security benefits early, which means they're left with less money. Some people are forced to take early retirement due to situations beyond their control, or simply a lack of planning.

Post is working as long as he can to avoid using personal retirement savings and to maximize his Social Security benefits.

By drawing Social Security benefits early, your clients automatically reduce the amount in benefits they'll receive for the rest of their lives. (The earliest someone is eligible is age 62).

The chart gives some examples provided by the Social Security Calculator at This chart assumes that an individual was born in 1950 and is currently earning $85,000 a year. You can see how much can be gained by simply waiting a few years.

So why would anyone draw early? Many people are forced to do so because of the lack of proper retirement planning. Some reach 62 and are just ready to be done working, but have little or no retirement income. Without a proper plan, they're forced to collect Social Security to help pay the bills. It's one of the most concrete examples of the importance of the advice you give clients. It can go a long way to helping them become truly independent in their retirement years.

Turning the Page

Currently, the official retirement age varies according to the year you were born. In Post's case, his official age to retire and receive full benefits is 65 years and 10 months. He plans on waiting until that day so that he can collect full benefits. He also wants to continue working so he can continue to earn an income and receive health care benefits through his employer.

If an individual does start drawing benefits early and is still employed, there are certain limits to how much money one can earn each year while drawing benefits. If an individual goes over those limits, the benefit is reduced even more. That's just one more reason to wait as long as possible to take Social Security.

Post is also excited about working longer because by doing so, his retirement savings can stay intact longer and he'll have more assets left for things like vacation and hobbies. He's also concerned about leaving something to pass on to the next generation.

Once Post reaches his retirement age of 65 years and 10 months, he can also begin to work as much, or as little as he wants with no effect on his Social Security benefits. At that point, Post says, he'll return to the class room and work as much or as little as his health and his travel schedule would allow.

Important Things to Consider

For advisors preparing to, or in the midst of starting conversations with clients about their needs in retirement, there are a few critical factors that must be addressed:


  1. Life expectancy. As noted earlier, individuals are now living longer than ever before. Advisors should help clients plan for the financial consequence of being around longer.
  2. Cost of living. Clients must keep in mind that a $2,500 monthly Social Security benefit in 2011, may not go as far in 2020. Failure to account for inflationary changes could be detrimental. While client needs may vary, advisors should recommend using a 3% inflation rate to calculate clients' needs.
  3. Expected and unexpected cash flows. Aside from anticipated monthly bills and expenses, there are unexpected life events (medical expenses, etc.) that could virtually demolish any retirement income. Advisors should work with clients to create a plan for life's surprises.

If your clients want to receive full Social Security benefits, it's important that they wait until their official retirement age. That can be a difficult decision for some people to make. Post says the decision to wait was an easy one for him.
He adds that when you're finally able to travel and you see all the sights of this country, you realize why you're retired. It's to enjoy the great things this world has to offer. And the longer he can afford to do that, the happier he'll be.



J. Graydon Coghlan is founder and president
of Coghlan Financial Group Inc., a financial planning
and risk management firm. He is a registered
representative of Securities America companies.
Visit, or call 800-884-5121.