Worth the Wait

IF SOMEONE ASKS ME what my favorite day is, I’d have to say the second Wednesday of the month. That’s when my Social Security check gets deposited into my checking account. I’ve received three checks so far and each one has been a joy. The experts might be right when they say retirees who have predictable income are happier. At age 70, I feel like a little boy who just got his first bicycle.

I waited a long time for my first check—and it was well worth it:

• I now have the best income annuity you can own. Compared to annuities sold by insurance companies, Social Security has better inflation protection, it’s taxed less heavily and there’s less credit risk.
• Because I waited until 70, my check is large enough to cover our overhead costs.
• That larger check reduces the risk that our investment portfolio will run out prematurely.
• We can spend more freely knowing we have a financial backstop in my larger Social Security check.
• Delaying my benefits has lowered our taxable income. While I waited to claim Social Security, I was able to do larger Roth conversions, and those mean I’ll have smaller required minimum distributions starting at age 72.

If I die tomorrow, you could argue that I made the wrong decision in delaying Social Security—and you might be right, though my wife will get my benefit as a survivor benefit. On top of that, from a financial point of view, dying tomorrow isn’t my big concern. Instead, what would be more worrisome to me is watching our savings dwindle in our later years—and be left with a smaller Social Security check to fall back on.

Read more by Dennis Friedman

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