When to Claim Social Security Benefits

Continual is the barrage of short articles on the topic of when to begin social security retirement benefits.    It is an important topic that was recently addressed by CNBC in a February 1 piece that featured the noted economist Laurence Kotlikoff of Boston University.    Kotlikoff bears the academic wisdom that holding off as long as possible before initiating social security retirement benefits is the best path for most people.

“Most people” may not be you or someone you know. If you were in your late 50s or early 60s what would be your best choice about when to draw benefits? Social Security rules bound the age lane from 62 through 70 but the best choice varies by individual and their health. Here, we turn speculation into an informed choice based on all the financial elements of a household and its members. Planners can do it for their clients, and clients can do it for themselves.

The How-To Applied

This is a perfect application for economics-based financial planning, and Cynthia and Paul Wilson represent empty-nester couples who have both worked, may want to work some more, and are in their early 60s, knowing full well that Social Security retirement benefits could be dropping into their bank accounts very soon.

The Wilsons live in Mesa, Arizona, in a clustered community of flat-roofed stucco’ d homes with pools and contentious HOA meetings.  Residents communicate with the “Neighborly” app, a paradoxically named digital swamp of vitriol among the type A’s and a platform for voyeuristic observation among the type B’s who just hope the peace is kept.   Mostly, the Wilson’s time is spent at work, Cynthia an RN and Paul a manager at a nearby Ace Hardware store.  They love their home and never plan to leave.  Bought it for $500,000 in the midst of the great recession and it is fully-paid for and valued at $900k today.  The Wilsons feel they live in a resort with the metro benefits of close access to Phoenix.  Far enough away from Gilbert to keep the Super Bowl fans at arm’s distance, yet close enough to catch a Thursday round at the Waste Management PGA tour event.