When to Begin Social Security? Even Advisors Aren’t Sure

Here’s a scary thought; Social Security is the largest source of retirement income for most Americans.

Routinely referred to by politicians and policymakers as a safety net to supplement other sources of retirement income, the sad reality is too many older Americans rely on it outright.

Just as troubling is the apparent confusion over when to begin taking Social Security payments—confusion that extends beyond recipients to the advisors themselves.

A recent paper from David Blanchett, head of retirement research with Morningstar, seeks to dispel that confusion. Blanchett and his team performed three claiming scenarios: receiving benefits early (e.g., at age 62 versus 66); delaying benefits past full retirement age (e.g., age 66 versus 70); and the maximum realistic delay period (e.g., at age 62 versus 70).

The results suggested it’s best not to begin taking benefits early, and if clients do, they should not “play with their own money” by attempting to invest it for a higher return than they would have received by waiting.

“Most retirees would be best served delaying Social Security benefits until at least full retirement age or later, and that delayed benefits are especially valuable for females, married couples, retirees who expect to invest in relatively conservative portfolios during retirement and retirees who have longer life expectancies,” Blanchett reported.