Why wait to take Social Security and forgo the money?
The answer depends largely on your gauge of life expectancy.
There is a breakeven point at which it can make sense to wait. If you don't expect to reach average life expectancy, then it might be better to take the money early.
Factoring life expectancy into your Social Security decision
Starting Social Security early reduces your benefits, but it also means you'll receive more monthly checks. On the other hand, starting Social Security later results in fewer checks over your lifetime, but those checks will be larger. Theoretically, it shouldn't matter when you start as long as you have an average life expectancy. But, in reality, about half of us will live longer than average.
There is a breakeven point at which it can make sense to wait. There is no way to know your life expectancy for sure, but if you're in good physical shape, don't have any chronic illnesses or bad habits, and have a history of longevity in your family, then the general rule of thumb is that you should wait as long as possible to collect benefits. You will receive your largest benefit by delaying retirement until age 70, so it never makes sense to wait past that age.
If you don't expect to reach average life expectancy, then it might be better to take the money early. Just don't forget to consider your spouse. If your spouse earned less than you did during your working lives, and you expect that your spouse might live longer than you, then think about whether it makes sense for you, the higher-earning spouse, to postpone benefits as long as you can in order to maximize your spouse’s Social Security survivor benefits.
Take the next step.
Call 877-673-7970 to schedule your personal retirement consultation.
Source: "Making the Most of Your Social Security Benefits", by Rande Spiegelman, March 14, 2012.
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