Optimize Your Social Security Income to Benefit Your Family or Charity

Will you rely on Social Security income to live? Many of us will be in a position in which we are eligible to receive Social Security benefits, but we won’t rely on that income to cover our daily living expenses. If this is the case, you have the opportunity to optimize those payments into a substantial gift for charity or to enhance your legacy. Here’s how:

Let’s assume that between you and your spouse, your Social Security benefit will total about $30,000 each year. Rather than spending that money, take the $30,000 and give it to your favorite charity each year. The first benefit this creates is a tax deduction by removing the full $30,000 from your taxable income. Now that the charity has the full $30,000, have the organization buy a last-to-die, survivorship life insurance policy on you and your spouse. If both of you are roughly 65 years old, that will buy a $2.5 million policy for the ultimate benefit of that charity. Now that’s an effective way to optimize those Social Security payments.

Perhaps you’d rather dedicate those Social Security payments to your own legacy instead of giving it to charity. After paying taxes, that $30,000 will likely be closer to $20,000. You can take that $20,000 and, along with your spouse, purchase a last-to-die universal life insurance policy, which is guaranteed forever. Those premiums would buy a policy of about $1.5 million, all of which would be income and estate tax free if purchased inside a properly structured life insurance trust. Compare that with the option of putting $20,000 each year into a portfolio of stocks and bonds — who knows what you’ll end up with after paying taxes and dealing with market volatility.

At Howard Kaye, we want you to start thinking about how to position your assets in a way that will maximize the transfer of wealth from one generation to the next or to the charities that you support. A proper estate plan anchored by life insurance can help accomplish these goals. Speak to us today by calling 800-DIE-RICH and we’ll show you how.