Social Security Maximizing Strategies - Figuring the Age to Take Benefits Personal
Every single time I write a column in which I discuss Social Security maximizing strategies, as I did for the umpteenth time several weeks ago, my inbox is flooded with emails from readers who are trying to squeeze every last nickel out of their Social Security benefits.
Some people (almost always men) send me spreadsheets in which they've calculated a dozen different scenarios for various combinations of benefits between themselves and their wives.
They ask me to help them pick the optimal option. Others give me all their facts (ages, benefit amounts, life expectancies, etc.) for both spouses and ask me to tell them which maximizing strategy would work best for them.
Still others write to tell me they are worried sick about their potential Social Security benefits. They want me to ease their fears and help them decide what to do.
In other words, many readers ask me to serve as their financial planner. But here is the rub: I am probably the last person on the planet you should be asking for advice about money matters. (One look at my bank accounts and investment portfolio will prove that.)
To be sure, I know Social Security rules inside and out; I can tell you how Social Security works; and I can explain the various maximizing strategies that are all the rage now among retiring baby boomers. But after explaining those rules to you, I can't tell you what to do.
I am endlessly fascinated, and I must admit, sometimes even a little put off, by some people's obsession over money. Don't get me wrong: Money is great, and it's usually better to have more of it than not enough. But how much is too much? And should you be working yourselves into a tizzy worrying that you might make a decision that nets you a few bucks less from your Social Security account than you might have received had you made a different choice? I sure am not. Let me explain.
My wife and I each took our Social Security benefits at age 62. I can hear financial planners and Social Security maximizing specialists gasping for air as they read that! After all, conventional money-making wisdom these days has it that the longer you delay the start of your Social Security benefits, the better off you will be. Most so-called "experts" will suggest delaying your benefits until age 70.
Well, my wife is currently pushing age 70. (She's a few years older than me.)
That means she's been getting Social Security checks every month for almost 8 years now. Let's say she's averaged getting $1,200 per month for the last 96 months. That's $115,200 she has received between age 62 and 70.
Had she waited until age 70 to start her benefits, she'd probably be due about $2,100 per month, or $900 more per month than she is getting now. That's a decent sized chunk of change, no doubt.
But it would take her 128 months, or about 11 years, to make up for the money she would have not received between 62 and 70. In other words, by age 81, she would have won the Social Security "game" had she waited until age 70 to start her Social Security.
My wife comes from a long line of women who've lived into their late 80s and early 90s. So chances are she will live well past age 81 and probably would have been better off to wait until age 70 to claim her monthly benefits. But here's the deal: WE DON'T CARE! We have been having way too much fun these past 8 years spending her (and my) reduced Social Security checks. We've taken that $115,200 and traveled all around Europe. We have made many nice trips from one end of this country to the other. We've bought several new cars. I don't want to imply that we are rich. We certainly are not.
But we feel rich in so many other ways. In addition to spending money, we also spend a lot of time riding our bikes around town or sitting on our back porch playing Scrabble. We purposely moved away from a part of the country many people consider a paradise just to be near our grandkids. We bounce them on our knees almost every day. What we are doing is living life to the fullest and not worrying one little whit about whether or not we made the right Social Security decision. "Stop worrying and start living" is the best advice I can give most of my readers.
And here is one final little story on this subject. I bet many of you get all kinds of invitations in the mail from financial planners to attend seminars about maximizing Social Security benefits. I think I get one or two every week. I usually just pitch them. But a while back, I decided to contact one of the local firms sponsoring such a seminar. I introduced myself and explained my background and told them I'd be willing to participate in their meeting as a Social Security expert who could explain various Social Security rules, including the maximizing strategies. They eagerly accepted my offer. During the seminar, I gave the audience an overview of Social Security benefits and eligibility requirements. I then went over the maximizing strategies and noticed the financial planners in the back of the room almost salivating over the potential business they hoped to drum up from the folks in the crowd -- helping them (for a fee, of course) make the "right" decision about when to take their Social Security benefits.
But I finished my presentation with the same spiel I made in this column: My wife and I took reduced Social Security benefits, have never regretted our decision and have been having the time of our lives in retirement.
At the back of the room, one of the planners was trying to get my attention. He made a throat-cutting gesture with his finger signaling me to stop talking. He came up to the front of the room and quickly ushered me off the stage. I was never invited back!
If you have a Social Security question, Tom Margenau has the answer. Contact him at firstname.lastname@example.org.
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