Social (in) Security

by Michael Velazquez

The title is attempting to poke a little fun and bring some attention to this very misunderstood topic. First, we need to debunk some myths and redirect some flawed thinking.

Myth #1: Social Security will probably not be there for me.

Incorrect. SS is the only guaranteed income that most Americans are going to have to last their retirements, which could be a very long time. Every now and then, some misguided soul with a political agenda stokes fear by making unfounded allegations about the longevity of the program.  Whereas it is true that there are more retirees now and fewer people working, the fund is responsibly managed. There isn’t a politician alive that has the will to cut Social Security and even though Full Retirement Ages are being staggered, depending on your date of birth, you more than likely can count on receiving the benefits you are entitled to.

If you have lingering doubts about the longevity of the Fund, access the following 458 page document on your computer: Annual Statistical Supplement to the Social Security Bulletin. It will amaze you.

Myth #2: It is always better to take benefits at age 62

Incorrect. The only time it is better to start at age 62 is if you don’t have much income or assets and for some reason you cannot work. If you work, you cannot earn above a certain amount without losing benefits. We sometimes hear the flawed argument, related to Myth #1, that “I’m not taking any chances, in case the Fund runs out of money”. This is highly improbable. Your strategy should not be impacted or based on fear and paranoia.

Myth #3: It is better for me to wait until I’m 70 to take benefits

 

Incorrect. It just depends on your health and longevity, your assets and spending, income in retirement, and a slew of other factors. Some have to be caretakers of others. Of course, if we knew exactly when we were going to die, we could calculate the break even point, but since we do not have this information, we can make some assumptions and take some educated decisions to reduce or eliminate uncertainty.

Social Security is a big part of your retirement strategy. By learning the rules and understanding your options you can adopt a strategy that will let you optimize your Social Security income for many years to come.