Take the middle of the financial world in 2024

On HumbleDollar Adam Grossman has some tips for managing finances in 2024. Take the middle of the road he suggests. Here are three of his ten important tips.

5. Social Security. Because Social Security can be claimed at any point between ages 62 and 70, it’s the subject of endless debate. The conventional wisdom is to wait until 70 to get the largest possible benefit. I agree with that. But if you’re married, it often makes sense for one spouse to claim at least a little earlier. While this strategy may not appear mathematically optimal, the reality is that none of us knows how long we’ll live, so any amount of math is still just a guess. My recommendation: Steer clear of the age-70 dogma and instead take a center lane approach.

6. Annuities. Social Security is one of the best annuities available. But if you’re looking for additional retirement security, a single-premium immediate annuity (SPIA) might not be a bad choice. Annuities have a bad reputation because they’re often loaded with opaque fees. But SPIAs tend to be the best of the bunch, and if a permanent paycheck is what’s most important, I wouldn’t get bogged down in the negativity surrounding annuities. Instead, you could split the difference by annuitizing just a portion of your assets.

7. Pensions. If you’re lucky enough to have a traditional defined-benefit pension, your employer will typically give you a choice when you reach retirement age. You can accept the benefit as a lump sum, which you can then invest on your own. Or you can opt for guaranteed monthly payments for life.

Often, the math in these cases will point in the direction of the lump sum. But before you make that choice, remember Irene Triplett. When she died in 2020, at age 90, she was still receiving a pension benefit based on her father’s military service—in the Civil War.

Adam Grossman – HumbleDollar