AUSTIN, Texas – A couple in their sixties sought financial advice as they prepared to retire and navigate the complexities of collecting Social Security benefits. Greg and Sherry, both 62, had a substantial portfolio totaling $1.7 million and hoped to maintain a $6,000-a-month lifestyle throughout retirement. One of their considerations was whether to put off collecting Social Security until they reached the age of 70 to maximize their benefits and bolster their budget.
A certified financial planner, James Conole, cautioned against delaying the collection of Social Security, warning that it would strain the couple’s portfolio and lead to increased borrowing from their savings to cover their costs. He conducted an analysis that revealed that by choosing to delay collecting, the couple would forgo over $400,000 by the end of their life. His plan for Greg and Sherry centered around the assumption of an 8% return on their assets, but he also considered a lower growth rate scenario, where delaying Social Security until age 70 would result in over $850,000 added to their overall wealth.
Conole emphasized that while there are benefits to delaying the collection of Social Security, the decision is nuanced and heavily dependent on individual circumstances. He pointed out the existence of pros and cons to waiting to collect Social Security, with benefits beginning to increase after age 67 and the potential to build up delayed retirement credits worth 8% a year. However, a significant risk of waiting to claim is the possibility of passing away before receiving any Social Security payments.
The insights shared by Conole shed light on the complex decision-making process that individuals approaching retirement age may face when considering when to collect Social Security. These considerations are further complicated by varying personal financial circumstances and life expectancy, requiring careful evaluation and planning to make the most informed decision. Conole’s analysis serves as a valuable reminder of the importance of personalized financial planning and the need for individuals to carefully weigh the potential benefits and drawbacks of claiming Social Security at different stages.