When Should I Take Social Security – Earlier The Better

When Should I Take Social Security - Earlier The BetterThe question always arises of when should I take social security? My answer is going to surprise most people, but I fully feel that social security should be taken as early as possible. No matter what your age, you need to know when to take Social Security. All most people hear is that 65 is the age of sweet retirement. The problem is that we don’t full retirement now until 66. The worst thing, according to many critics of early withdraw, is that we can take out Social Security at age 62. Many people cannot resist taking it out at this point of their lives, but they do it for the wrong reasons.  But should we wait to take social security or take it right when we are eligible? The main idea of the American workforce is to retire as soon as possible and enjoy the good life. So at age 62, it is hard to resist taking Social Security and getting a jump on retirement.




Take a look at the following aspects that can affect your retirement going forward and decide if they will hurt your chances.  This will help in answering the great question of “When should I take social security?”.



1.  You will get less per check.  People say you will receive a much smaller Social Security check for the rest of your life if you choose to take it at 62 years old, but is that actually a bad thing?  From looking at the chart below, we are led to believe that it would be a very bad thing.  But I am here to explain why it is not so bad and is something that you should seriously consider.  When should I take social security is not a question that has a one fit all answer and I will show you why.

When Should I Take Social Security - Earlier The Better

I am going to start out this by stating a few other facts that people need to realize in order to make a sound decision concerning when to take Social Security.  Let’s say that you are currently going to turn 62 this year and are wondering if you should take Social Security early.  The first thing I would do is consider your life expectancy.  A nice little chart here points out that you can expect to live about 69 years if you were born in the 1950′s.  So that gives us about 7 years of life to enjoy the money.  I am sure you are hoping to live much longer than that, but the fact still remains that the average 1950′s baby will only live to be around 69 years old.  So that is what I am basing this off of.

Don’t forget that you will always be able to invest your early disbursements into some high quality equities, like the ones I wrote about below.

When Should I Take Social Security - Earlier The BetterBased on the chart above, you will receive $750 a month starting at age 62.  This is a yearly income of $9,000.  If you wait until you are 66, like all the financial planners are telling you to do, then you will receive $1,000 a month for a grand total of $12,000 a year.  A very nice increase to say the least.  But is it worth waiting that long in order to capture that raise to your Social Security check?  Let’s find out.



When Should I Take Social Security If You Are Born In The 1950′s

When should I take social security if I was born in the 1950’s?  If a person born in the 1950′s take their Social Security at age 62, they will be able to get 4 years or 48 payments of $750 a piece.  This would equal up to $36,000 in payments that they would of not got if they waited until they were 66 years old.  Using the life expectancy of an average 1950′s baby, we know that the average person from that era will only live to be about 69 years old.  That means that an average person would receive 7 years or 84 payments of $750 for a grand total of  $63,000.  This is not even including what kind of money could be earned if you took the original $36,000 and invested it all into some solid stocks like I wrote about here.  Now if that person waits until they are 66, then they will receive 3 years worth of payments or 36 disbursements of $1,000.  This would equal up to $36,000 in overall payments for the average 50′s child.  When should I take social security if I was born in the 50’s?  It looks like right away.

Here are a few other little things we need to think about for the above case.  The average inflation rate since 1913 has been 3.22% according to current data. That means that the money you receive when you turn 62 will be worth a ton more now than when you turn 66.  It will be about 14% more, and this doesn’t even include compounding which would probably push it to about 15%.  What this means for the $1,000 check when you turn 66 is that you will be able to buy $850 worth of goods based on what you could buy with $750 when you were 62.  So you are actually waiting 4 years to buy about $100 more of goods per month, taking inflation into the equation.  Is this worth the wait?  What does the above mean for someone born in the 50′s?  I take it to mean that you better truly consider taking your Social Security early in order to enjoy your early years when you hit 62.  Based on life expectancies, you will collect about $27,000 more in payments by taking it early and not waiting until you are 66.  What I would do if I was in that boat would be to actually invest the money at age 62 into a nice fund that matches the S&P.  Why the S&P 500?  Well, the median return on it has been 12.98% over the last 25 years.  That includes the crappy stretch through 1998 to 1999 as well as 2007 through 2008, which most funds try to not include by starting news funds after those periods.  A solid fund to consider if you are going this route is the iShares Core S&P 500 (IVV).




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When Should I Take Social Security If You Are Born In The 1980′s

When should I take social security if I was born in the 1980’s?  Now we talked about people born in the 1950′s, but what about those born later that have a much higher life expectancy?  Let’s look at someone born in the 1980′s for example.  They are expected to live to be about 74 years old on average.  This would change the whole scenario up above.  When should I take social security?  Well, if you took Social Security at age 62, you would receive 12 years of payments equaling $108,000 in total payments.  If you wait until you are 66 years old, you will receive 8 years of payments equaling $96,000.   This is $12,000 less than what you would get in net money taking it early at a lower rate.   This is the one thing that really bothers me with when I read articles from major financial networks speaking so highly about waiting to take Social Security later in order to capture more money.  It isn’t more money at all.  If we take the average age of death for all people from that decade, you can see from the figures up above that if they all waited until 66 to take their Social Security, then the government would love it because they wouldn’t have to pay as much out.  This is not rocket science folks, this is pure mathematics.  Keep in mind that the inflation rate will play a huge part in the above numbers as well.  With an average inflation rate of 3.22%, you will be losing a ton of purchasing power by waiting until later in life.  You never hear the big financial papers talk about that do you?  Look at the article here by Fox Business News.  Another example of using life expectancies of 80 years old, when it is actually 69 for the 50′s kids.  Hmmm, makes you wonder if someone is paying them to have people wait longer to take their Social Security in order to save the government money.  I will not fall into that conspiracy mode quite yet and just chalk it up to people not fully looking into all the variables.

What I am finding is that many of the articles written today are basing their facts off of the current life expectancy of new born infants.  If you are reading this right now and you are born in 2010 or sooner, congratulations on reading at such a young age. :)  But seriously, those that are born on 2010 or sooner will have a life expectancy of about 80 years old.  This is what bothers me about all the articles concerning Social Security that I read.  They are using current births to talk about when to collect, when they should talk about those born in the 1950′s and 1960′s and their respective life expectancies.  If this was done, you would have a much better idea of when should I take Social Security.  I will continue to create a few different “TRUE” scenarios down below based on real statistics and not skewed for their own purposes.

When Should I Take Social Security If You Are Born In The 1960′s

When should I take social security if you are born in the 1960’s?  Let’s take a look at when to take social security if you are born in the 1960′s.  By now, you are anywhere from 54 years old, to about 45 years old.  You are at the point that you are looking at what you will probably get in payments when you hit 62.  Once again, you need to look at the your life expectancy and start from there.  If you are born in the 60′s, the average person will only live to be 70 years old.  With that being said, I am not here to try to guess who will live to be 100, I am here to state facts and give you a real analysis of what you probably should do.  So based on the Social Security payment chart up above, taking payments at 62 will get us about 96 payments of $750, or $72,000 overall.  Waiting until you are 66 will get you about 48 payments of $1,000, or$48,000 overall.  This is a solid difference of $24,000 based on all the average numbers released to us.  I know there will be some differences in payments as well as life expectancies.  This article is to give you a good picture of what the “average” person of a certain decade should do.  If every single member of your family lived to be a 100 and you are in perfect health, then of course it might pay to wait.  But those people are already figured into my calculations and that is why my numbers are so powerful.  I think we are getting the answer we need for the question of when should I take social security.






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I was a financial advisor before teaching finance, and I still remember running these numbers and telling people what I found.  They were so shocked at what I explained to them.  Most of them had read the same articles that told them to wait as long as possible.  I use to love to show them how if they invested all of their payments from 62 to 66, that they would amass a small fortune to live off of in its own part.  Then how they could take that small fortune and buy an annuity coupled with their current Social Security payment and end up with a higher payment then they would of received if they waited for Social Security until they were 66.  The best part was that if they died right after they turned 66, their families would be guaranteed at least the amount of money invested in the annuity, where as Social Security doesn’t pay hardly squat to your family.  (A few hundred bucks in a one time death benefit)  This advice usually cost my clients about $350 to $500 to get.  I now freely share it with all my readers in the hopes of helping them truly max out  their Social Security.  (You can still buy me a drink for the advice :) )

When Should I Take Social Security If You Are Born In The 2010′s

Well here we are, the years that all the writers about Social Security like to base their facts on, but never actually tell the readers that.  You will find that being born recently will have a major impact on how much they will receive.  These children born during this decade are expected to live to be about 80.  Taking Social Security at age 62 would give them 18 years of payments that would total $162,000 based on the $750 a month chart above.  Taking the payments at age 66, would give them payments of $168,000 over the life of their Social Security.  If they wait until 70, they would receive 10 years of payments equaling only $158,400 for the life of the payments.  Numbers do not lie folks.  At this point, if I was born in the 2010 decade, I would STILL take Social Security early and just invest it into a nice EFT fund that matches the S&P 500, like I talked about above.  So when should I take social security if I was born in 2010 or after?  Just like I said before, as soon as you can, just invest it well and you will make out like a champ.

Summary About The When Should I Take Social Security Question

When should I take social security?  I am no Nostradamus by any means, but just using the facts up above will give you a great idea of when you should take your Social Security.  As always, you should consult a professional.  But please ask them to base their estimates on what the current life expectancy is for someone in your situation.  Don’t let them give you some generic information based on people born today.  Go into the meetings with your life expectancy that the government gives out themselves.  Women will live about 5 years longer than men and different races have statistically different life expectancies.  These are all things that need to be considered when looking at when to take Social Security.  I can tell you that I will be personally taking my Social Security right when I turn 62 and investing it into that mutual fund up above and then leaving it go until I really need it.  Based on my research, the bigger gamble is taking it too late and not getting close to what you paid into it.

When should I take social security?  The worse case scenario is that you get to live to be a 100 and you should be happy because you lived that long.  I don’t think you will be doing a ton of stuff at 90 to 100 years of age.  If you need extra income, you need to check out my articles on how to make money online.  They will show you how I have turned this site into a nice side income machine.

 

When Should I Take Social Security – Earlier The Better

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