Take The Money And Run?

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This is the final installment in our four part series on Social Security (if you have not read the previous blogs, here are the links to Part 1, Part 2, and Part 3). We’ve talked about the numbers, and it’s clear that waiting as long as possible to claim Social Security will generate the greatest monthly benefit; but not all decisions come down to dollars and cents.


Here are four reasons that you may want to claim benefits early:


  1. You need the money.

This is the most obvious reason and is frequently chosen by those who retire early. They have cash flow needs that can’t be met, and their financial plan cannot sustain a large draw from their retirement accounts.  They need Social Security income to fund their current lifestyle.


  1. You are worried about risk.

Retirees without a pension, who have received a paycheck for decades, may become more concerned about market fluctuations now that their paycheck has retired along with them. To avoid drawing down on a portfolio that is subject to volatility, they may prefer to take an early benefit to give their investment account more time to grow before tapping it for income.


  1. You are worried about the future of Social Security.

Although it’s projected that the Social Security trust fund will not be depleted until 2035 (if no changes are made to the program within the next 15 years), some retirees are concerned about the program’s future viability, and want to take their benefits before Congress tinkers with the program. Once the trust fund is depleted, existing payroll taxes will cover about 76% of scheduled benefits. Read more here.


However, in his August 8 executive order, President Trump has included a payroll tax deferral as part of another round of stimulus due to the COVID pandemic. President Trump has also said that if reelected, he would eliminate payroll taxes, which casts a cloud over the future of the program.


  1. You want benefits while you are younger and healthier.

While they can afford to defer benefits until their full retirement age or longer, they may choose to use the extra Social Security money for discretionary expenses like travel, which they can enjoy more while they’re still healthy.


Although our advice is often numbers driven, client decisions frequently come down to the intangibles. The rational options, while easily quantifiable, are only part of the decision-making process. Ensuring that you pair the quantifiable with the aspirational will usually produce the most satisfying results.



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Ogorek Wealth Management, LLC

Ogorek Wealth Management, LLC