Now or Later? When to take Social Security.

Now or Later? When to take Social Security.

Now or Later?  When it comes to when to take your social security, this is a common question that most retirees ask themselves.  And then they ask themselves again.  Then they ask the next door neighbor.  After they ask everybody the know, they are still confused on when the right time is.  Do you take it early?  Or do you wait until you can get the full benefit.   If you find yourself getting ready to ask the cashier at the local grocery store when the right time to take your social security is, don’t.  Let’s see if I can give you solid reasons to take your social security benefits now, not later.

What are Your CD’s Paying?

I know what you’re thinking.  What does your bank CD’s have to do with your social security benefit? I’ll get there in a second.   First, let’s look at 5 year CD rates.  Scouring the net, 5 year CD rates are currently paying approximately 3.5% (as of June 2009).  Now according to the Social Security Administration, the average retiree will be bringing home $1150 per month as their benefit check.  So based on current CD rates, a retiree would need approximately $395,000 to get them the same monthly benefit.  It’s hard to find a secure investment that will give you that same monthly benefit without that much in cash investments.

Obviously, there is concern on the overall strength of the social security program.  But for a recent retiree, they should expect to see those checks deposited for several more years to come.

What About Stocks

Many would argue that right now is an excellent buying opportunity in the stock market (I might be one of them).   But telling a soon to be retiree to look to the stock market for a “secure” investment is like telling Eskimo that he needs to stock up on air conditioners.   I think you get the point.  Value oriented dividend paying stocks have been beat down just as bad if not worse that tech stocks back in 2001-2002 leaving many investors skiddish of the market. A portion of the money would make sense having some stock exposure, but not nearly as secure as getting a social security check from the government each month.

Needing Some Security

Most retirees will look to bonds to be their primary income source in retirement.   But in a year that that saw the strength of corporate bonds in question, government agencies faltering, and many municipal bonds being questioned on how insured they really are, the only safe haven was treasuries.  There was a period that you could make more by picking up a pennies in the street, than could make off treasury yields.   Is that the answer for a retirees source of income?   Opting to take social security at an earlier age will give you a secure income without having to find a safe place for your other investments.

On Second Thought

We all know that the longer you wait to take Social Security the more you make- 8% per year as a matter of fact.  So if you don’t need it, why not just delay taking your social security benefits, right?  Here’s one reason why you might want to take it now.   If you elect to take your benefits at a reduced rate, you can always change your mind and reapply when you reach normal retirement age.  Here’s the catch… have to repay all benefits you have received up until that point.  All you have to repay is the principal, though.   There will be no interest accrued.  Not a bad strategy if you don’t need the money and you have no other ordinary income to worry about.  If so, that’s where you have to be careful.  Taking your social security early while your still employed will result in you being taxed on the social security checks you receive.

Cash Your Social Security Check!

Social Security Benefit Calculators

Before you elect to take social security do some planning.   Head over to and use their calculators to help you find out what your expected benefit is. Be conscious of the tax circumstances if you are still employed.  After you’ve done all your homework and things appear on the up and up…..Get Ready, Set, Retire.


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