Consider this headline from a recent survey of retirees: “Many Regret Decision to Take Social Security Early.”
Sounds ominous, right? Well, the problem is that the title isn’t entirely supported by the survey’s actual results, which found that only 38% of respondents “say they wish they would have waited” longer before taking benefits. According to this, in other words, somewhere along the lines of 62% of respondents, or a large majority, evidently don’t regret the decision.And why should you?
As Motley Fool contributor John Maxfield explains in the following video, the Social Security Administration has designed the benefit formula to pay the same amount of total benefits over the life of a typical person irrespective of when they elect to take them. Additionally, as John goes on to discuss, taking benefits sooner rather than later can facilitate an earlier retirement, which allows retirees to escape the physical and psychological wear and tear associated with many jobs.
The source of this article is “Motley Fool”. I readily admit that they are on my daily read list. They, like me, have a somewhat contrarian philosophy. Maybe that is what draws me to them. I don’t know why the topic of the article isn’t talked about much. Since I know that many of my readers are approaching or are in retirement, I thought I would talk about this again.
The fact is if you have a relatively normal or shorter life line in your genealogy then it makes good sense to take Social Security early. As the article mentions SSA has a formula that basically gives you the same overall amount independent of when you take it. I think the calculated age at death is currently 78. If you die before this age you will come out ahead if you take social security early. If you live longer than you may come out ahead if you wait.
The other thing that even this source article doesn’t mention is that if you take it early and are able to invest the money profitably you will bank even more. Now I know in the age of almost zero percent bond rates and very fluctuating markets investing anything for a substantial profit takes work and some risk but even a small return will allow you to come out ahead.
In my case I look at the family tree and I see parents, grand parents, and great grand parents dying before the 78 year mark so I took it early and like usual I am not looking back on that decision. I am among those 62% who don’t regret that early decision. It allowed me to bank about an additional $75,000 that is still growing today six years later. If I live to be an old ornery fool of ninety I would have been better to wait but at ninety I probably won’t even be able to appreciate that fact. :)