November 13, 2019

The Big Social Security Dilemma

The Internet is overflowing with articles by financial gurus that tell you to take Social Security early or be wise and take it at age 70 when you will get the best and highest monthly return. The majority are wrong for a number of reasons. Social Security is not all that solvent and those Baby Boomers that are applying for Social Security now are faced with a huge dilemma. Will Social Security remain solvent and be around in another 20 years? No one seems to know the answer but one can be sure the government will owe at least $30 trillion dollars soon and be swimming in debt and Social Security will be the least of the Government’s problems.

What the financial gurus fail to tell you is that life expectancy is subject to change and that 78 years and 4 months still seems to be the general life expectancy for males. You may live longer but the key question is your health. Will the return on your monthly Social Security check be large enough at 8 year and 4 months after applying for Social Security benefits at age 70 be large enough to offset the monthly check had you elected to take Social Security at age 62. Most statistical studies have shown that if you are able to collect the lower amount for a period from age 62 for 11 years, you will have hit the break even point. So from age 73 onward, you are ahead of the game and have beat the odds.

I personally think that taking Social Security at the earlier age of 62 years is a better way to go. Yes, you do give up the higher amount that you would have received at age 70 but you collect it for a longer number of years. Since none of us can predict our health as we age, the lower amount of Social Security seems to be the more predicable and safer way to go. If one knew for sure that they would live to be a healthy 80+ years or more, then the way to go would be to wait until age 70 years to file for Social Security. But we all know that aging is not always pleasant nor predictable.

Eventually, too, the Government will have to address the legal age to retire and claim Social Security. Currently it is creeping up and there has been a lot of discussion of stopping the early filing for Social Security at age 62. But as long as the option exists, there is little doubt that taking the lower amount at age 62 is the better option especially if your health is good. If the full retirement age for Social Security reaches age 68+ or higher, the decision will become even easier. The election issue for many people becomes even easier if a worker, 60 years or older, is laid off or loses their job. Finding employment is not easy and most workers in their mid 60s, do not have the savings to sustain a long period of unemployment. I just hope that Social Security remains solvent and the option to file for benefits at age 62 is still open.

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer
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