Today’s post is for the chronologically gifted (i.e., those eligible for Social Security). The conclusion from a Sean Williams article on The Motley Fool: take your benefits while you can. The only way holding off on social security benefits pays off is if you expect to live beyond 85. It’s a morbid thought, thinking about when you’ll die, but that’s the fact of retirement planning. You have to make sure there’s enough money to support yourself while you are alive.
Williams used the average monthly Social Security payout for retirees ($1,363.66) and looked at lifetime payouts for various retirement ages (62 to 70). Assuming 2% cost of living adjustments, the 62-year-old retiree’s payouts exceeds all others until age 85. So if you’re eligible for Social Security, you may as well take it now. You’ll get lower monthly payments but greater total benefits.
For the rest of us, realize how little Social Security actually pays: $1,363.66 x 12 = $16,363.92. That’s not much to live on, even if you have no debt. You need to start planning now to make sure you grow a retirement nest egg that will support the quality of life you want in the future. Also read Chapter 6 of Basic Personal Finance and you’ll realize you’re Social Security benefits will be less than current retirees (if you get any at all).