Ask Terry Questions Social security: when to take it

Social security: when to take it

By Terry Savage on May 07, 2017 |

Dear Ms Savage; I enjoy reading your column each week in the Denver Post. Why do almost all articles and analysis of the question “when to take social security” focus on the breakeven point or the lifetime benefits collected, and not include an analysis of NPV (net present value) or the time value of money? Thank you in advance for your valuable time! Jim

Terry Says

Good question.  Basically, you are saying that we should value the importance of having the money NOW, as opposed to later.  But don't forget, the Social Security COLA is supposed to offset the diminishing spending power of the future checks we receive.  Far more important is distinguishing between the desire to have that money now, and the impact of waiting until at least FRA to take your check.  Current calculations suggest that every year you wait is equivalent to earning 8 percent on your money!  That is to say, that waiting from age 62 till FRA makes a substantial difference in your ultimate base check -- IF you can figure out a way to delay taking the check until age 66+.

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