Author-blogger, Michael Kitces published a terrific article explaining the benefits and possible costs to people who choose to delay the receipt of social security benefits past their full retirement age. Our conclusion is similar to the author’s, namely, delaying Social Security Benefits can result in significant long term benefits, with the caveat that the beneficiary lives long enough to collect them. Benefits delayed from full retirement age until age 70 accrue an added benefit of 8% per year, which is a terrific return in any markets. (For those born between 1943 and 1954, full retirement age is 66.)
However, it’s not a simple decision to make, as one must forgo available current benefits in order to achieve this 8% adjustment. For example, if you need the money to continue your lifestyle, you may not be able to afford to defer benefits. In addition, you will have to live long enough for the higher benefits make up for the money you did not receive if you had started receiving benefits at full retirement age. So, this is a decision that must be carefully considered. However, for those who expect to live a long time and can afford to defer, it could result, as Kitces suggests, in “The Best Long Term-Return Money Can Buy.”
If you or someone you know would like help working through the details on your personal situation, please contact us at Horizon Advisors, we’ll be happy to assist you.
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