From Retirement Now Newsletter September 2nd 2021
I came across a good article just recently that’s worth sharing with the community here.
I don’t default to the idea that all people should delay their Social Security until age 70 to get the maximum dollar amount each month.
I think it’s much more a personalized decision, regardless what all the math and life expectancy tables say. Some people should draw early, some should delay.
And that may be a somewhat controversial position in the financial planning industry to some people.
Here’s someone giving me a little backup on this position.
The article was from Market Watch titled “Why I won’t wait to take Social Security”
https://www.marketwatch.com/story/why-i-wont-wait-to-take-social-security-11629766414?mod=retirement
In his spare time the author still wrestles in the ring as a Mexican Luchador under the name Latin Thunder.
Here’s some of his bone crushing insights delivered straight from the top rope…
The author says he’s seen the arguments in favor of delaying Social Security along with the life expectancy tables that prove the case. But he’s still not convinced.
One of the reasons?
He never knew either of his grandfathers. One died of stroke and the other died at a very young age. The author’s father had no recollection of his dad because he died at such a young age.
He goes on…
Even the author’s father died at the age of 72. How well would have delaying Social Security to age 70 have worked out for him, with only 2 years to collect? He got out at 62 drawing Social Security with a pension.
Also, his father-in-law… he had tough working conditions that he was able to scale back on by taking early Social Security.
The author continues saying that he used to work swing shifts. He handled it fine but as he got older it began to wear on him. Now he currently works straight shifts.
He rounds out the article saying he knows all the stats say to delay Social Security. But he wants to “hedge my bets and claim my benefits at age 62. I’m 100% certain that, if I’m still working at the plant at that age, I won’t hesitate to retire and claim my benefits.”
My thoughts…
When to draw Social Security is a highly personal decision.
The article shows the perspective of not just life expectancy, but life quality. All the jobs by relatives mentioned are tough, physically demanding, and sometimes dangerous, jobs. These types of jobs can decrease life expectancy, but even if they don’t… at some point (age) you just don’t want to keep doing them if you can avoid it.
Then there is the life expectancy argument for why you should delay Social Security.
Which still doesn’t mean you should delay as long as possible.
Because in life you only get one… life.
And life expectancy tables are based on millions of people’s aggregated and averaged out life spans.
You may be healthy, going to live a long time. But maybe you won’t see that literal bus coming down the road. The averages may have said you’d be around a while, but after that bus hits, hey that’s your only shot and it’s used up.
It reminds me of those experiments that social scientists and economists will do.
There’s a whole field of study called behavioral economics. And they will do tests where they’ll offer you a choice between two options. It might be something like:
You are given $50. You then have the option to:
A: keep $15 of it (thus losing $35 for sure) or
B: Take a 60% chance of losing the $50, or a 40% chance of keeping all of it.
Option B has a $20 estimated value (40% of $50 = $20). Option A only has a $15 value.
Most people would choose Option A because they are guaranteed to get the $15, whereas in Option B they have a big chance of getting a goose egg.
But…
If someone said you can play this bet out a thousand times, I’d choose B every time, knowing that over time I’d average out ahead. I just need multiple shots at it.
But you only get one shot at life.
Does this mean everyone should file early?
No.
There’s still plenty of reasons to delay. If you’re still working and not yet full retirement age for Social Security. If you are married and want to make your Social Security benefit as big as possible for your spouse to have it after you are gone. If you are in great health and comfortable taking the risk of delaying because barring any unforeseen accident you believe you’ll beat the life expectancy tables.
Or if your retirement plan just wouldn’t work unless you had that extra income.
All good reasons to delay, and there’s probably a ‘ho bunch more to consider.
Anyway, I hope this gets you thinking about the decision. Looking at the hard facts (like life expectancies and break-even points, etc.) as well as the subjective “facts” (I’m ready to quit this tough job, I’m not guaranteed tomorrow, etc.).
Coaching people on the Social Security decision is just one aspect of how we help people put together a retirement plan. Having a financial advisor on your side can help you stop worrying about some of the challenges you’re facing planning for your retirement.
Go here to book a 15-20 minute chat with me to see if we can help you have a better retirement.
