socialsecurityOften times a financial analysis is completed without looking at all the factors. With the majority of people that vote being above the age of 65 and the baby boomer generation ascending to retirement, it is very unlikely that Social Security will be lost.

The funding for Social Security will go on.  At what level is unclear, but the funding will continue. Despite what will happen to Social Security in the future, individuals tend to take benefits at the earliest possible age of 62, although increasing depending on your year of birth, according to a 2013 Urban Institute analysis of U.S. Census Bureau data.

There are many factors to review when deciding whether to take Social Security.  The belief that you should take Social Security immediately may not be the best advice.  Holding off and tapping your portfolio first may be more advisable for many reasons:

1.  Social Security has a guaranteed increase of 8% if taken at age 70 instead of 62.

2.  This growth could be even greater due to the COLA, the cost of living adjustment that enables the value of benefits to grow on a more-or-less yearly basis. Consequently, you could have significantly more money each month coming to you from Social Security.

3.  Withdrawing income now from your portfolio may also be more beneficial due to taxes.  Taxes are likely to go higher in the future. As a result, taking from your portfolio now may give you a boost later by minimizing the government’s “take”.

4.  Your portfolio is finite. At some point in the future it will dwindle.  Social Security on the other hand continues on.  Therefore, if you were to live longer than you had expected, Social Security acts as longevity insurance.

5.  In the event that you pass away first, your spouse will receive the higher of their or your Social Security benefit.  If you delay withdrawing the benefit until the latest age, you provide a larger benefit for your spouse.

Social Security is a powerful tool. Used right, this tool can benefit your retirement.

To learn more about James, view his Paladin Registry profile.