As a financial advisor, I frequently get asked when it’s best to take Social Security benefits. To do a thorough evaluation requires calculating the benefit amounts based on various starting dates, anticipated COLA increases, the client’s life expectancy, the client’s work plans, and the client’s tax situation.
These complicated calculations typically lead to the conclusion that, as long as the client will live into the 80’s, it is better to wait to claim benefits.
I’ve certainly done my share of those calculations. However, I haven’t done so in many years. Why? Because there is no reason to! I base my recommendation on just one simple question:
Is the client younger than full retirement age and still working?
If yes, don’t take benefits yet. If no, take the benefits as soon as possible!
My reasons are simple:
· It can make a difference to your client’s lifestyle now.
· Your client’s life expectancy might turn out to be shorter than expected.
· There is no guarantee that Social Security will continue unscathed in the future.
There might be rare exceptions that justify analyses (divorced spouse, non-working spouse, etc.), but I vote for common sense over pencil pushing!