We can’t control what others do and we can’t stop misfortune from striking. But we can control our own actions. Those who are financially prudent will most likely enjoy success, even if events don’t always go their way.
Looking at facts from all angles is important. Here are excerpts from an interesting article on the subject. You might like to read the full article
Stories We Tell
Adam M. Grossman | Apr 7, 2024
YALE UNIVERSITY economist Robert Shiller, in his book Narrative Economics, argues that storytelling has more of an impact on economic events than we might imagine. It might seem like the financial world ought to be driven by facts and data, and yet stories often take on a life of their own.
3. “There’s a penalty if I claim Social Security while I’m still working.” You may have even heard the formula, which sounds punitive: Social Security will deduct $1 from benefits for every $2 earned. While this is technically true, it overlooks some important details.
First, this penalty is imposed only when benefits are claimed before your full Social Security retirement age (FRA), which is between ages 66 and 67, depending on the year you were born. Second, this isn’t a true penalty. Those dollars aren’t lost forever.
Instead, after a worker reaches FRA, Social Security adds back the amounts that were earlier withheld. In addition, any year in which you work will add to your Social Security earnings record, and that could potentially increase your benefit. The bottom line: If you want to work part-time in retirement while receiving Social Security, you shouldn’t worry.
4. “It’s a mistake to claim Social Security before age 70.” Age 70 is when the largest benefit check is available, and for that reason it’s become a sort of personal finance commandment that everyone must wait. But this should be viewed more as a guideline than a rule.
Why? While you wait, you’re also taking a risk of another sort. For each year that you don’t claim benefits, your benefit needs to be that much larger down the road to make up for the missed years. And because of the time value of money, that breakeven point is pushed out even further.
For many people, it makes good sense to take this risk, since the breakeven point tends to be around age 78, and folks who make it to 70 can expect to live until their early- or mid-80s. But if you’re married, the math changes. That’s because it’s only worthwhile for both spouses to delay until age 70 if both spouses outlive that breakeven point. That’s why it can make good sense for one spouse to claim earlier than 70.
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Adam Grossman always puts an informative, insightful column on the Humble Dollar blog.
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Good solid advice from Mr. Grossman.
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