Ask Terry Questions Taking social security early or not?

Taking social security early or not?

By Terry Savage on November 10, 2013 | Financial Planning / Retirement

I disagree with my wife and say we should hold off taking her social security until she is 70.  I have a pension which pays well.  I say we can draw from tax sheltered investments and take advantage of the tax savings by withdrawing money of offset her wages when she retires and then draw the social security at a later date.  We are going to have to take required distributions beginning at 70 1/2 so why not use some of that now at a lower income level.  We have sufficient funds to pay our bills and live as we now do with vacations included.  I continue to read that waiting is the best thing because of the almost guaranteed cost of living increases with social security.  We are in good health with typical problems of 65 year old people.

SAVAGE SAYS:  I would generally agree with you, that if you don’t need the money, it pays to wait — because every year you delay after full retirement age  is “worth” about 8 percent more in benefits, and on top of those benefits you will receive an annual COLA reflecting (sort of) inflation!   Many people need to take SS early, or are afraid it will not “be there” for them if the system is reformed to limit benefits for those who have other income or assets.

But more than guesswork is involved here.  It all has to do with your goals, whether to maximize income, smooth income benefits in case one or the other of you dies first, and some of your existing benefits are reduced.  There is an absolutely fabulous Social Security calculator created by T. Rowe Price to help you make this decision.  Here is a link, so you can do the actual calculations and see how your overall lifetime income (and the amount of remaining assets you might want to leave to children or grandchildren) will be impacted by the decision you make:

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