Taking Social Security Benefits Early Out of Fear Not a Good Idea

So many people fear Social Security will not be around and end up taking their benefits earlier than they should.  Mary Beth Franklin, contributing Editor for Investment News, says that social security is funded with FICA, those earmarked taxes that comes out of your paycheck.  The trustee's report says that sometime around 2033, the surplus funds that have been built up over the last 30 years will run dry and if Congress does nothing, there would only be enough money collected from payroll taxes to pay about 75% of promised benefits.  Congress knows that not only is Social Security the most successful government program, it's the most popular, Franklin says.  Older people vote in higher percentages than any other segment of the population and Franklin "guarantees that before this happens, Congress will step in."

As such, Franklin thinks it's "fool-hearty" for someone to grab their benefit because they think it might go away when there is money earmarked to pay those funds.  She says people should focus more on their income that comes from general sources.  

Mary Beth Franklin  Investment News  Source: investmentnews.com

Mary Beth Franklin

Investment News

Source: investmentnews.com

The Social Security Administration is not in the business of giving people claiming strategies to maximize, like Franklin is, but rather to inform people of their benefits at different ages.  She encourages everyone to go to the SSA website, which is ssa.gov, and create their own highly secure, personal social security account.  It's the only way to get information about your estimated benefits, to see your reported earnings over your career and how much you've paid in social security taxes over those 35 years.  As far as how to maximize those benefits, there are many websites available to help people make those decisions and Franklin has a book targeting financial advisors but also available for consumers, called "Maximizing Your Clients' Social Security Retirement Benefits."  

The idea of delaying your benefits until they're worth more, for at least the higher-earning spouse, makes a lot of sense, says Franklin.  If longevity doesn't run in your family or you have a chronic illness, delaying may not be the right option because she says "you must be present to win."  If you're not going to be around to collect these benefits, maybe it's not a good to wait, she cautions.

Mary Beth Franklin is a Contributing Editor for Investment News.  She spoke with Retirement News Today during this interview.  Retirement News Today provides online retirement news video content and is a featured network of Sequence Media Group.

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