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Ignoring Conventional Advice on Social Security

If you’ve been watching our videos and our webinars for any length of time, you probably know that we often go against the grain when it comes to certain aspects of financial planning. If your goals and risk tolerances are potentially better achieved by doing something other than following what passes as conventional financial planning wisdom, then we believe that’s what you should do. 

So given that information, when it comes to taking your Social Security retirement benefits, it may be in your best interest to defy the rules of thumb, ignore the pundits, and go a different route. 

Conventional advice on Social Security says it’s always best to wait as long as possible to take your benefits so that you can take advantage of the delayed retirement credits that will increase your benefits for each month you wait, up until age 70. Waiting longer means a larger check. They say the only reason to take your benefits early is if you either need to have the money now to live on, or if you don’t expect to live a long time.  

And that advice does make sense – sometimes. If you can afford to hold off on taking your benefits, there are situations where someone with a shorter than average life expectancy is actually better off delaying taking their benefits, and where a person with a longer life expectancy should take their benefits early. 

Sounds counterintuitive, right? 

Okay, let’s take a hypothetical married couple. Spouse A has a very high Social Security benefit, but their health or family history (or some combination of those) suggests they won’t live much longer than, say, age 71 or 72. Spouse B, on the other hand, has a much smaller benefit but is currently very healthy and expects to live well into their late 80s or into their 90s. 

In this case, this couple might be better off if Spouse A (the one with the higher benefit and the shorter life expectancy) delayed taking their benefit – maybe all the way out to age 70 – even though they don’t expect to live much past 71 or 72. And Spouse B, the healthy one with the expected long life and the lower benefit, should take their benefit as soon as they’re eligible – maybe as early as age 62. 

Why is this the case? It has to do with the survivor benefit aspect of Social Security. 

When we look at Social Security benefits, we have to consider the longevity of the benefit itself, and not just the longevity of the owner. Spouse A in this example has a much higher benefit than Spouse B and doesn’t expect to make it to their mid 70s. If that expectation does indeed happen, the surviving Spouse B, by Social Security rules, would lose their own small benefit and begin receiving the much larger survivor benefit (based on the amount Spouse A was getting) for the rest of their life – which Spouse B expects will be a really long time.  

Remember, when one spouse dies, the survivor basically gets the higher of the two benefits the couple was receiving. Spouse A waited to take their benefit so that Spouse B would have as large a survivor benefit as possible. And why did Spouse B with the long life take theirs early? Because there’s no point in waiting. Take the smaller checks now, knowing that the larger survivor benefit will likely come along sooner rather than later.  

And even if both spouses live a long time, or if the supposed “unhealthy” one outlives the “healthy” one, the larger benefit itself survives until they’re both gone. 

So there you have it – once again we’ve knocked down the conventional strategy. Social Security decisions can really be tricky, and you don’t want to leave money on the table that you’re entitled to. If you haven’t yet considered your Social Security strategy, I’d urge you to talk with one of our Lucia Capital Group advisors and have a plan in place before you begin taking your benefits.  

We do this all the time: it’s a big part of our entire planning process. How can we help you the most? Just give us a call. 

Important Information:

The information provided should not be considered specific tax, legal, or investment advice and is not specific to any individual’s personal circumstances. To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

No client or prospective client should assume that the presentation (or any component thereof) serves as the receipt of, or a substitute for, personalized advice from Lucia Capital Group or from any other investment professional.

You should always seek counsel of the appropriate advisor prior to making any investment decision. All investments are subject to risk including the loss of principal. This material was gathered from sources believed to be reliable, however, its accuracy cannot be guaranteed.

The information provided is based on current laws, which are subject to change at any time. Lucia Capital Group is not affiliated with or endorsed by the Social Security Administration or any government agency.

Social Security rules can be complex. For more information about Social Security benefits, visit the SSA website at www.ssa.gov, or call (800) 772-1213 to speak with an SSA representative.

Examples cited are hypothetical, are for illustrative purposes only, are not guaranteed and subject to potential federal and state law amendments. There is no guarantee that you will achieve the results discussed or illustrated.

Rick Plum is a registered representative with, and securities and advisory services offered through LPL Financial, a registered investment advisor and member FINRA/SIPC. The investment professionals are affiliated with LPL Financial and are conducting business using the name Lucia Capital Group, a separate entity from LPL Financial.

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