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A recent article by Michael Finke in Think Advisor discusses some anecdotal evidence he has been hearing about recent trends in SS claiming. Worry about a reduction in benefits apparently is leading some retirees to claim their benefits earlier than might be expected given their wealth. I have to admit that this year’s discussions around SS funding and administration have given me pause.
Two things about the article. It was published in a professional journal targeting financial advisors. Second, the discussion targets more affluent retirees, who can afford professional advice, as well as delaying their SS. I think the discussion is useful information for new or future retirees still considering when to claim SS.
As a member of the not affluent HD readers, I’d say waiting to claim is usually the best strategy for my peers as well, though exercising this option can be tricky for them.
It also seems that many people are looking for an excuse to file early. It used to be a faulty kind of break-even calculation, now they rationalize that SS is going broke.
Good piece!
I suspected this, just the access to medical technology would shift it.
I also agree with a holisitic approach to portfolio thinking and planning.
I had a chance to review 2 of the articles linked in the Finke article – one by Kotlifkoff, and one by Finke and Blanchett. The 2nd linked article provides some interesting discussion and data on the differences in longevity for more affluent retirees. That’s something that should likely be considered by many of HD readers. This is even more important for couples with longevity concerns.
That was an interesting article. Thanks for mentioning it. I saw something similar at JP Morgan. Retirement: Planning for what’s next | J.P. Morgan Private Bank U.S.
Not sure how claiming earlier is a good strategy in the event SS were trimmed by 20% or so. There would still be a cut in their benefits of 20% or so. Seems like the best strategy is to claim as close to the projected insolvency date as possible. They still have at least five years.
Why is “the best strategy is to claim as close to the projected insolvency date as possible” ?
I read the article but walked away with the thought that this like every other article in favor of waiting to aged 70 to claim says you get ‘more money’ in the form of a larger checks. They omitted that you pretty much break even no matter if if you claimed at 62 or 70 and reached aged 84. Waiting to claim or taking the funds earlier hold different implications for different situations.it just depends how you want to structure your retirement income.
I think the central point of waiting in the article was that it’s good longevity insurance. He’s addressing high net worth people so the ability to create income in different ways is assumed to be there.
Breaking even in aggregate benefits is not as valuable as extra monthly income which is what really matters I think.
Interesting article by Finke addressing affluent retirees. I don’t know how common this is, but I know a few people who don’t claim SS because they are affluent, although they pay for their medicare quarterly.