The debate continues: When to start Social Security benefits?


Q. All the experts say we should delay starting Social Security benefits. I am 73, and I started benefits at 62. Because of this, I have not had to touch my 401(k) and I lived off a pension and Social Security, and I saved in my IRA until age 70 1/2. Why would anyone say I’d be better off raiding retirement funds and delay Social Security?
— Convinced I’m right

A. Many people have strong feelings about when to start taking Social Security payments.

The answer isn’t right for everyone, and there are several factors to consider.

The first is life expectancy, said Ken Van Leeuwen, a certified financial planner with Van Leeuwen & Company in Princeton.

He said if you have longevity in your family, it may be better to delay payments until age 70 because you will collect more over your lifetime.

“If you feel like you may have a shorter life expectancy due to family history or illness, then it may be better to start taking payments early,” he said. “There is a `breakeven’ age — around 78 years old for most people — where it would give you more money over the course of your lifetime if you delay until 70.”

Taking payments early — as you described it — can have benefits.

“In the example you shared, it might not be best to take money from retirement accounts to supplement your income until Social Security kicks in because you would owe income tax on all the retirement account withdrawals,” Van Leeuwen said. “We would generally want clients to use non-retirement assets such as checking, savings, or other non-qualified accounts to fund retirement until you are forced to take the required minimum distributions at age 70½ to keep these assets growing tax-deferred for as long as possible.”

In some cases, Van Leeuwen said, a person may not be able to afford to delay taking Social Security payments.

If someone is living off a fixed cash flow, then they may want to start taking income from available sources as early as possible to meet cash flow needs and avoid going into debt, he said.

On the opposite side, if you do not need the cash flow from Social Security payments, then it might be better to take the Social Security early and invest the payments that are received, Van Leeuwen said.

“If you can average a higher growth rate than the 8% increase that Social Security provides, then you could potentially make more money over the long term by taking payments at 62,” he said.

As this discussion shows, everyone’s personal situation is different and not every strategy will work for everyone. So it’s best to work with an experienced financial planner who can help guide you.

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This story was originally published on Nov. 26, 2019. presents certain general financial planning principles and advice, but should never be viewed as a substitute for obtaining advice from a personal professional advisor who understands your unique individual circumstances.