Social Security Benefits - When to Begin Collecting Them

As with most financial planning topics, this question, although seemingly straightforward, is actually rather complicated. As a result, when it comes to retirement planning, there are few issues that raise as much interest right now as Social Security.

Although it’s been around since 1935, most people today still admit knowing very little about Social Security and how it works. Yet, it is an important aspect of any retirement plan. Consider the following statistics:

• Nine out of ten individuals age 65 and older receive Social Security benefits.¹
• Social Security benefits represent about 39% of the income of the elderly. ¹
• Social Security provides more than half of the income for nearly two-thirds (65%) of elderly beneficiaries.²
• For almost four out of ten elderly recipients (36%), Social Security provides more than 90% of their income.

According to the Social Security Administration, the average monthly benefit being paid to current retirees is $1,234 per month. For a 66-year-old man with an average life expectancy of 82, this represents total payments of well over $200,000 in today’s dollars.

With so much at stake, the decision to begin Social Security benefits becomes a critical one. Let’s review the basics, setting aside for the moment the rules of eligibility.

Prisoner of Wealth

Very rarely would someone ask: are you or have you ever been a POW (“Prisoner of War”).  If you were asked that question, you might ask what in the world they are talking about or jokingly respond that you are indeed a prisoner – a prisoner of work.  But certainly, no one would admit to or even consider being a “Prisoner of Wealth."

The primary step to financial freedom is to free yourself from all the things that make you a Prisoner of Wealth. What do I mean by Prisoner of Wealth? The story of the Monkey Trap is a great way to illustrate this theory.