{"id":58282,"date":"2023-02-25T09:00:58","date_gmt":"2023-02-25T14:00:58","guid":{"rendered":"https:\/\/www.ino.com\/blog\/?p=58282"},"modified":"2023-02-24T13:31:05","modified_gmt":"2023-02-24T18:31:05","slug":"thinking-about-social-security","status":"publish","type":"post","link":"https:\/\/wwwtest.ino.com\/blog\/2023\/02\/thinking-about-social-security\/","title":{"rendered":"Thinking About Social Security?"},"content":{"rendered":"

If you believe the scaremongers in the financial press and elsewhere, the clock is rapidly ticking down to the time \u2014 early June, according to the Wall Street Journal \u2014 when the U.S. Treasury will default on its obligations unless Congress passes legislation to increase the debt ceiling. <\/p>\n

If Congress doesn\u2019t act in time, the government will default on all of its obligations, we\u2019re told, including payments due Social Security recipients, veterans, and beneficiaries of other government programs, not to mention the millions of investors both foreign and domestic who own the $31.5 trillion (and counting) of outstanding government debt. <\/p>\n

If you\u2019re like me, you\u2019re probably tired of reading another story about what a monumental disaster this could be, but don\u2019t worry, I\u2019m not going to bore you with one. <\/p>\n

I\u2019m just using the debt ceiling drama as a segue into one of my financial pet peeves, and that is the advice we\u2019re constantly given about when is the best time to start claiming Social Security benefits \u2014 assuming there are any in the event Congress fails to act and the government defaults.<\/p>\n

If you believe the scare talk and you\u2019re over 62 and therefore eligible for Social Security, you\u2019re probably thinking you should apply now before the government runs out of money. <\/p>\n

<\/div>\n

But according to the experts, you\u2019re supposed to wait until you reach your \u201cfull\u201d retirement age, which for most people is between 66 and 67, depending on what year you were born. (\u201cFull\u201d means you can earn as much as you want from a job and still collect your full Social Security benefit; if you start collecting before that, any money you earn from a job reduces your benefit dollar for dollar, although you\u2019ll eventually get it reimbursed over time. But we won\u2019t get into that right now.) If you can wait even longer, until you\u2019re 70, you\u2019ll reach your \u201cmaximum\u201d benefit.<\/p>\n

By waiting until you reach your full or maximum retirement age, these experts say, you can earn a much larger monthly Social Security check, or about 8% a year, for as long as you live. Which is pretty substantial, and it\u2019s true. <\/p>\n

However, these same experts almost invariably fail to tell you that by waiting until you\u2019re 67 or older, you\u2019re forgoing Social Security payments you could have been collecting in the interim, which can also add up to a nice amount of money.<\/p>\n

But what if you don\u2019t live that long and never collect?\u00a0<\/p>\n

Actually, there is a breakeven point at which you would have earned just as much money by collecting at 62 rather than waiting to get a bigger payout later. That breakeven point is around 78 or 79 years of age, which just happens to be about the same age as U.S. life expectancy at birth.<\/p>\n

As it turns out, many people \u2014 rightly or wrongly \u2014 ignore the experts\u2019 advice. Indeed, about a third of Americans start collecting as soon as they\u2019re eligible, i.e., when they\u2019re 62. Did they make a mistake?<\/p>\n

That\u2019s impossible to say, because nobody has any idea when they\u2019re going to die, which is what makes the whole investing and Social Security claiming game so challenging. If we all knew exactly when we would die, think how much easier financial planning would be. <\/p>\n

If you knew you only needed enough money for, say, 20 years of retirement rather than 30, wouldn\u2019t you breathe a lot easier? Instead, you have to plan for an indefinite number of years, either less than 20 or maybe a lot more.<\/p>\n

That\u2019s the problem I have with these experts who tell you to wait, and they all sing from the same hymn book. But this advice doesn\u2019t apply to everyone \u2014 everyone\u2019s situation is different \u2014 so they shouldn\u2019t generalize and assume what\u2019s right for me is right for you. <\/p>\n

<\/div>\n

Many people are in bad health and don\u2019t expect to live a long life, or their family histories indicate that they\u2019ll die relatively young, so it makes sense for them to collect as early as they can. Lots of people really need that extra money as soon as they\u2019re eligible. How about the many people who have been employed since high school and are simply tired of working and don\u2019t care if they could earn more by waiting to collect? <\/p>\n

That\u2019s another bit of advice the experts recommend \u2014 work longer. That\u2019s easy for them to say. But it\u2019s not always about money, you know.<\/p>\n

So, yes, it does make more sense \u2014 for some people \u2014 to wait and max out their Social Security benefits. But you only know if you made the right decision until it\u2019s too late. <\/p>\n

Of course, that doesn\u2019t answer the question if Social Security will be around when you\u2019re ready to collect. That\u2019s a possible subject for a future column.<\/p>\n

George Yacik<\/a>
\nINO.com Contributor<\/p>\n

Disclosure: This article is the opinion of the contributor themselves. The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. This contributor is not receiving compensation (other than from INO.com) for their opinion.<\/span><\/p>\n","protected":false},"excerpt":{"rendered":"

If you believe the scaremongers in the financial press and elsewhere, the clock is rapidly ticking down to the time \u2014 early June, according to the Wall Street Journal \u2014 when the U.S. Treasury will default on its obligations unless Congress passes legislation to increase the debt ceiling. If Congress doesn\u2019t act in time, the […]<\/p>\n","protected":false},"author":16,"featured_media":58285,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6920],"tags":[4962],"class_list":["post-58282","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ino-com-contributors","tag-social-security"],"yoast_head":"\nThinking About Social Security? - INO.com Trader's Blog<\/title>\n<meta name=\"description\" content=\"If you\u2019re over 62 and eligible for Social Security, you\u2019re probably thinking you should apply now before the government runs out of money.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.ino.com\/blog\/2023\/02\/thinking-about-social-security\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Thinking About Social Security? 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