If you have a low interest rate loan, I would not pay the house off right now, given the current inflation rate. Certainly not with your retirement accounts, no! You would pay high taxes taking a big chunk all at once. Small monthly withdrawals to bridge you to when you turn on social security benefits would be alright, should you decide to delay.
How long do you plan to live? You need to calculate your Social Security break even point. That’s the age where you’ll get more total if you die before that point taking it now, and more total if you die after that point taking it later. Then you need to estimate when you will die. There are online calculators for that.
However, even if you think you will die before that age, you might not want to take that gamble. Suppose you live to 100? Do you want the future you at age 99 to be getting a monthly check $650 + cost of living increases higher? For that matter, how much higher than that will it be if you wait til age 70?
The great majority of people start taking Social Security benefits at full retirement or earlier, but many of them have no choice. If you do have other assets (or can work longer) then you have the option of delaying it until you can get the maximum possible monthly benefit.
I used to be of the mind to trigger it sooner, like Tim said, get my money back out of that corrupt sewer as fast as possible. That is best if you are going to die soon, for sure. But if not, I’ve started questioning that.
Here is my reasoning: No matter what happens to the economy, the government will continue printing money. They have to make the SS payments. Short of the nation collapsing, the checks have to come, or millions would starve. So even in hyper inflation with worthless dollars, you’ll still get the payments for life,
and with cost of living increases. But what happens to your investments in the meantime? Do your mutual funds, bonds, Bitcoin, gold, or whatever also rise with inflation? Or could there be a massive stock market crash, real estate crash, and 2nd Great Depression that wipes out your assets? Or suppose you simply live far longer than you think you will and outlive them?
Do you have a plan for long term care? LTC insurance? If not, a good chunk of that $1.4M could be wiped out by you having a stroke and needing full time care. But does that argue you should delay taking SS so you’ll have a bigger benefit later? Or does that mean you should hang on to your money so you can pay for your care?
These are all decisions you have to make for you depending on your circumstances and with careful thought. There are financial advisors that can model your situation and, like the hurricane spaghetti chart, give you a cone of likelihood of not outliving your money. If you delay SS and draw down from your retirement accounts monthly to make it to full retirement age (or beyond) how does that impact your projected future? And how does that compare to getting that bigger SS check?
Remember your investment manager may advise you to start SS immediately. He wants to keep your funds in his firm! Social security “counselors” may also advise you to start immediately. Do NOT trust them to know what’s best for you or have your best interest at heart! Their interest is to process you as quickly as possible and get you off their plate. Do NOT feel pressured into a fast decision by them if you call them for information.
Basically, is it better to bridge the gap with your retirement money for a while in exchange for a lifelong higher payout? That depends on a lot of things, how do you expect your investments to grow? Can you
guarantee they will grow and not shrink? Accounts that are guaranteed not to go down pay pitifully small returns, well below the rate of inflation.
So it is a risk. What is your risk tolerance? Your investments should be restructured to be more conservative at this time, however that means you lose out on a higher rate of return, and again, can they keep up with inflation? There is a school of thought that says the traditional advice to restructure investments more conservatively at age 65 is outdated. People used to expect to only live 10 or 15 more years but now many of us are living 25 and 30 years. Going conservative means missing out on more growth opportunity. But then, that’s more risk.
There are a couple of books I found helpful:
https://www.amazon.com/Social-Security-Inside-Silver-Anniversary/dp/1981651837
[URL]https://www.amazon.com/Get-Whats-Yours-Revised-Security/dp/1501144766/ref=sr_1_3?crid=14ACQMZUHZP81&keywords=get+whats+yours+social+security+2021&qid=1639254821&s=books&sprefix=Get+wh%2Cstripbooks%2C185&sr=1-3[/URL]
Spoiler alert, they tend to advise to wait as long as possible but outline situations where you shouldn’t wait, and even if you disagree with that, they inform you about the complex rules you really should know before making a decision.
