It is my opinion that my father received poor advice 30-years ago, that is still affecting him today. What could that advice have been? My father is 91 years of age and before reaching the age of 62, he needed to speak with the good folks at the Social Security Administration. This is what we're discussing today, Social Security.
The woman whom he met with only asked my dad one question, “Tell me about your father?” My dad said, “My father’s dead.” “Really?” she replied. “Yes, he died at the age of 55.". She responded, “You need to take social security now.” She wasn’t looking at the “big picture”. In fact, there were a lot of things that she did not ask. She was only thinking about my dad’s father’s longevity. She did not ask about my dad’s grandfathers who both lived well into their 90s and now with my dad still around at the age of 91, you can see that longevity runs in our family. It just didn’t play out for my dad’s father.
There are many things that you need to take a look at regarding Social Security. First of all, your retirement age. Do you take the benefit early? Do you take it late? What about your lifetime earnings? What about spousal benefits? Will you be working in retirement and what are the tax implications? What about your health and the longevity that runs in your family?
When looking at health, whether you take the money at 62, 65, 67, or age 70, the Social Security Administration does not give anyone a ‘special’ deal. The benefits they pay are all based on the data of averages in the general population. If you’re healthier than the average, then one aspect of your decision should be based on whether you can beat the longevity of people who are just ‘average’ in health.
The longer you live, the better off you may be. Then there’s inflation or the C.O.L.A (cost-of-living adjustment). Then there’s your overall financial situation. If you have a large 401K, it might be better for you to draw from that first as opposed to living on it later on in life because if you don’t spend all of it, your family will then have to pay taxes on that money during a time when they may likely be in their own highest tax bracket.
You can see that there are many different factors to take into consideration. This is why it’s important to realize that in all these 25 different areas of your life that we've been discussing, you will never have all 25 of these "micromanagers" in the same room, at the same time asking the questions that need to be asked so you can have the fullest retirement possible.
If this is something that you are just a little bit unsure of, don’t make a mistake that you could regret for the next 30 years of your life. Perhaps it’s time to schedule your Financialoscopy®.
