Ask Terry Questions When to take social security

When to take social security

By Terry Savage on June 15, 2015 | Financial Planning / Retirement

I am 63 years old and have lost my job. I like not working and want to make a go of early retirement. My health is OK but probably won’t make it to 90. My wife has good genes and excellent health so a long life is probable. We have $850K in IRA/401K and about $200K in cash/taxable investments. The only debt I have is 7 years left on my mortgage. I track all expenses we live modestly, and we follow a budget. I can see that if I wait to 66 for SS and get my mortgage paid off, social security will cover all of our fixed costs (while we both live) leaving us to enjoy life with the retirement savings. But does it make sense to spend down my savings faster to put off taking social security? How do I determine that? Also should I pay my mortgage down faster than the 7 years even if I need to use IRA dollars? How do I figure this?

Terry Says:   You DEFINITELY want to wait until full retirement age — 66+ — to take Social Security.  The “short answer” is that you “give up” about a 7% return every year you take SS early.  And even worse, since your benefit is permanently reduced by taking SS early, you lose out on all future cost-of-living increases on that money.  If you want the “long answer” there is a link on my website home page to a SS calculator and explanation at T. Rowe Price.

I  hope you were able to refinance your mortgage before you lost your job.  Now it will be impossible.  My suggestion is to get some consulting work, or work in another field that interests you, and earn just enough to make your mortgage payments for the next seven years.  That will keep your mind occupied, and set you up perfectly at age 70 to have all your living expenses covered. Give it a try.  Do that instead of withdrawing from your IRA — because withdrawing now would put a dent in your future withdrawal income possibilities!



a personal
finance question