Social Security: Don't Let the "Returns" of Waiting Mislead You

Social Security is a key way for retirees to get valuable income, and many people find that waiting until later to take their Social Security benefits is a smart move. But some experts compare the additional benefits you get by waiting to returns on investments, and that can lead you to make a fundamental mistake in your Social Security decision.

Source: Social Security Administration

In the following video, Dan Caplinger, The Motley Fool’s director of investment planning, notes how waiting to take Social Security from age 62 to age 66 helps you avoid a 5% to 7% per-year reduction in benefits, while further delaying benefits from 66 to 70 increases those benefits 8% per year. Yet some people are tempted to compare these figures to returns on investment, comparing those percentages to average gains you’d see in your portfolio. Dan warns that there’s a fundamental difference that those calculations overlook: When you delay Social Security, you permanently give up the years of benefits you would have gotten by claiming early. That can still be a smart move in some cases, but you have to be smart with your financial analysis in order to make the right decision for you.

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The article Social Security: Don’t Let the “Returns” of Waiting Mislead You originally appeared on Fool.com.

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