Hi, I’m Jeremy Riggs, certified financial planner at Base Wealth Management. You’ve probably heard the rule of thumb, delay social security. Live off your 401k for a few years and watch that benefit grow 8% a year. For some folks, that’s perfect. But the math most people use to justify is usually off in two big ways.
First, that 8% return isn’t really a return. Yes, the government adds delayed retirement credits about 8% for each year you wait past full retirement age, but you’re also giving up a year of checks. Think of it this way. I can hand you $100 today and $100 next year or nothing today and $200 next year. Same total cash, slower arrivals. Delay still might be smart, but it’s not a magic 8% investment.
Second, every month you postpone the benefit, you’re draining more of your own portfolio. Those extra withdrawals cost future growth. Picture Tina. She retires at 62 with a million dollar nest egg and needs six grand a month. If she claims social security right away, her portfolio shoulders less of the burden and those untouched dollars keep compounding at a 7% market return. Taking the smaller checks earlier actually leaves her a larger account all the way to age 85. Even though the simple break even chart says, “Wait, why the mismatch?” Because return assumptions drive the answer. Run the same scenario with a 9% portfolio return and earlier claiming looks even better. Drop the return to 5%. And the advantage swings back towards delaying.
In other words, the higher you expect your investments to grow, the more sense it makes to tap social security sooner and let your money keep working for you. Lower growth, lean towards waiting. And that’s before we layer in taxes, Roth conversion windows, spousal benefits, or the emotional comfort of a guaranteed check.
So, how you decide? Stop treating social security in a vacuum. Line up the benefit timing against realistic portfolio growth, withdrawal needs, and a tax strategy. When you see the whole picture, not just the 8% headline, you’ll know whether claiming at 62, 67, or even 70 really serves your plan. Need help running the numbers? reach out and we’ll model it together. Whatever you choose, make sure the decision fits the rest of your retirement puzzle, not just the brochure math.
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