Taking Social Security benefits as early as possible, at age 62, is not very beneficial for an American retiree concerned with maximizing their post-working income. This is according to Steve Vernon, FSA and consulting research scholar in the financial security division at Stanford University’s Center on Longevity in a new piece at Forbes.
“There are really only a few good financial reasons to start Social Security retirement benefits at age 62, the earliest possible age with the lowest monthly benefit, or soon thereafter,” Vernon writes. Among these are being truly financially strapped, a beneficiary being single and having been diagnosed with a life-shortening disease, or if you’re so wealthy that your Social Security benefits don’t really enter much into your financial equation.
For those thinking of taking Social Security benefits early in order to invest them, Vernon advises against this because the beneficiary would have to invest all their benefits in stocks, which comes with all the risks associated with those kinds of investments.
“On the other hand, delaying Social Security benefits carries no investment risk at all,” he says.
Hearing about how taking benefits early is a good idea, if that advice is coming from a friend or relative, should be taken with a grain of salt, he writes.
“Virtually every actuary, economist, and Nobel prize winner who has studied our Social Security system suggests that for most people, delaying these benefits for as long as possible (but not past age 70) is a good financial strategy,” he says. “And they’re basing their conclusions on extensive research and analysis, not just expressing uninformed opinions.”
With an abundance of resources and information available on the topic of best practices concerning utilization of Social Security benefits, there are plenty of options for people to find good information from financial professionals, advisors and academics on the topic.
“Knowledge about Social Security from informed experts is literally at your fingertips,” Vernon says. “Knowledge is power. More importantly, knowledge is money in the bank during your retirement.”
Read the full article at Forbes.