I had a meal with my friend Ron yesterday. Over baked ziti, I told him I was writing some blog posts about Social Security.
OMG. The mere topic made him furious.
“Social Security is bankrupting the country. It will be broke by the time I retire.
There…Will…Be…N-o-t-h-i-n-g…Left,” he hissed.
(It was a little scary.)
America is evenly divided on the viability of Social Security.
Boomer, it turns out that Ron shares feelings with half the country. In 2015, Gallup pollsters reported that:
- 51% of Americans did not believe they would receive a Social Security benefit;
- 45% believed they would; and
- 4% didn’t know or had no opinion.
Gallup data show these numbers have remained fairly consistent for the last 25 years. On average, since 1989,
- 48% did not believe they’d receive a benefit;
- 47% believed they would; and
- 5% didn’t know or had no opinion.
Will Social Security be There for You?
No one knows for sure.
But you need to be clear on your level of confidence in the program.
Because the longer you wait to take Social Security, the bigger your benefits are. Like 76% bigger–depending on when you file. To help you sort it out, I’ve developed a 13-item checklist that assesses your confidence in the program.
If you tend to agree with more statements on the left side of the table, consider waiting for that bigger Social Security payout. If you tend to agree with the statements on the right, think about collecting sooner rather than later.
Decide When to Collect Your Social Security.
|Collect Later||Collect Now|
|I am unafraid to start drawing down savings now while waiting another 4-8 years to collect a bigger payment from Social Security.||Assets I accumulated during my work-life are already spent – or — were not sufficient to fund my retirement. I need the money now.|
|I believe Social Security will be there when I’m ready to collect.||I don’t believe Social Security will be there when I’m ready to collect.|
|I am willing to wait 4-8 years past my initial eligibility to collect a larger monthly payment.||I am unwilling or financially unable to wait 4-8 years for a larger payment. I prefer taking a 25% payment reduction.|
|I’m waiting for a bigger payment. I know that inflation cuts my purchasing power in half roughly every 20 years.||I am relatively unconcerned that inflation will cut my benefit in half over the next 20 years.|
|My job is secure in a secure company and secure industry.||I am down-sized / unemployed with little hope of a better job.|
|I don’t need the money now.||I need the money now.|
|I am in good health.||I am in poor health.|
|People live long in my family.||People die young in my family.|
|I want to wait so that my spouse gets the highest survivor benefit possible after I die.||I accept that my spouse will have to make do with a reduced survivor benefit because I collected early.|
|I am an inexperienced investor. I will benefit by waiting for my larger payment, which I know is a “sure thing.”||I am a long-time highly-experienced investor. I can make more money investing my smaller payment now than waiting for a larger payment later. I’m an excellent saver.|
|I am unafraid the government will impose a financial means test that only gives full Social Security to only the neediest. If they do, I will still qualify to receive my full benefit.||I am afraid a government-imposed financial means test 1) will show I have too many assets and/or 2) will result in my payments being reduced.|
|I am not afraid my benefits will be cut. I believe Boomer voters and the lobbying efforts of 37 million-member AARP group will ensure I receive the benefits I am promised.||I am afraid my benefits will be cut. I believe younger voters will overwhelming vote their own family interests and vote to cut or eliminate my benefit in favor of schools, health care, etc.|
|I believe Congress will raise taxes if necessary to keep Social Security solvent.||I believe Congress has too many other worthy programs to fund. They will not raise taxes to keep Social Security solvent.|
Collect based on your confidence in the program.
After doing your own due-diligence, if you tend to agree with more statements on the left side of the table, consider waiting for that bigger Social Security payout.
On the other hand, and again after doing your own due-diligence, if you tend to agree with the statements on the right, think about collecting sooner rather than later.
Only you know what’s right for you.