Considerations in Deciding When to Take Social Security

Recently I responded to a post from a blogger I respect, The Oblivious Investor, about decision making regarding whether to take early Social Security benefits for retirement or not.  It contains enough food for thought regarding this decision that my comment is presented below in its entirety.

There are obviously too many variables to consider regarding taking social security to be able to give one-size-fits-all guidelines, but I want to point out one non-financial consideration: with the break-even point of taking benefits at 62 vs 70 generally falling somewhere around age 80, for people who have ample resources they need to consider the USEFULNESS of the income between ages 62 and 80 versus ages 80 and say 98.

Each person has to make their own decision, but my experience is that generally people are as healthy and active as they can in those earlier years of retirement, and then at some point they’ve “been there, done that, got the t-shirt” and the extra income is less useful.

I googled ‘social security break even’ to find a quick verification of the break even point being somewhere around age 80, and found a good article from BusinessWeek . Coincidentally a colleague of mine in the fee-only Alliance of Cambridge Advisors, Bert Whitehead, was quoted in the article and he made a good point that if one invests the social security income they receive between ages 62 and 70 then the breakeven point gets pushed out to somewhere into age 92+.

I didn’t realize he was in that article, but at the risk of being biased in that I know he’s a great financial planner I think it’s a worthwhile read.