There Aren’t That Many Good Reasons To Start Social Security Very Early

There are really only a few good financial reasons to start Social Security retirement benefits at age 62, the earliest possible age with the lowest monthly benefit, or soon thereafter. Here are a few situations that might call for starting these benefits early:

  • If you’re truly financially strapped and have no reasonable alternative to make ends meet
  • If you’re single and have received a diagnosis of a life-shortening disease, or you’ve smoked for most of your life
  • If you’re the primary wage-earner of a married couple who receives a diagnosis of a life-shortening disease or has smoked for most of your life, and you have taken steps to provide for your spouse without needing the enhanced survivor benefits that result from delaying Social Security benefits
  • If you’re so rich that it doesn’t really matter to you how much your Social Security benefits are (Bill Gates, for one, certainly doesn’t need to optimize his Social Security benefits)

Here’s one more good financial reason to start Social Security very early: If you want to take a hit for the team, start your Social Security benefits as soon as possible. By doing so, you help reduce the future strain on the system. If that describes you, then, to quote Clint Eastwood, “Go ahead, make my day.” Everybody else should thank you!

But suppose you’re still thinking you really don’t need Social Security benefits to cover your living expenses now, so you should just start Social Security early, invest all the money, and be ahead of the game compared to delaying Social Security until your full retirement age or longer. Good idea? Nope! My analysis shows that to even have a chance of winning with such a strategy, you’d need to substantially invest all your Social Security benefits in stocks, with all the accompanying investment risk. Once again, let’s take inspiration from Clint Eastwood: “You’ve got to ask yourself one question – do I feel lucky?”

Because that’s what you have to depend on if you follow this strategy. On the other hand, delaying Social Security benefits carries no investment risk at all.

Of course, there’s a possible lifestyle consideration for starting Social Security early: You really, really want or need to retire, you don’t have enough savings to fund a Social Security bridge strategy, and starting Social Security early is the only way you can afford to retire. Just be aware that you’re making a tradeoff with serious consequences: enjoyment now instead of more retirement income later. This tradeoff has negative financial implications – a permanently reduced, lifetime retirement income.

If you’re still tempted to start Social Security benefits as soon as possible because you’ve heard it’s a good idea from your boss/brother-in-law/buddy/barber/bartender/barista etc., ask yourself this: Is the person dispensing advice an informed expert? If not, then why are you even considering their “words of wisdom” when it comes to your retirement finances? After all, virtually every actuary, economist, and Nobel prize winner who has studied our Social Security system suggests that for most people, delaying these benefits for as long as possible (but not past age 70) is a good financial strategy. And they’re basing their conclusions on extensive research and analysis, not just expressing uninformed opinions. 

Get smart with your retirement dollars, and take the time to learn the facts about Social Security. Here are a few good books that can help:

And here are a few good websites:

Don’t make the mistake of making an uninformed decision about when to start your Social Security benefits. Knowledge about Social Security from informed experts is literally at your fingertips. Knowledge is power. More importantly, knowledge is money in the bank during your retirement!

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