The Internet is a buzz with financial advisers and other so called experts talking about the glories of waiting to collect Social Security. DELAY, DELAY, DELAY, they say.
They promise a 7-8% “annual return.” But it is not a true annual return. Instead your monthly checks will be 7-8% higher if you delay collecting for a year. The reason your Social Security check is 7-8% higher each month if you delay a year is you don’t get a check while waiting. So you are not getting an investment return because there is no money given to you while you wait for benefits.
A 8% investment return would mean that you had, for example, $1000 and your investment increased 8% and now you have $1080.00. But when you delay your social security a year, you have no base of funds to work with, so there is no real return on your investment in a traditional sense. Your annual return while you wait is $0. You only get a return in twenty years or so.
Please, call it what it is when you delay Social Security: A increase in your monthly check of 7-8% by delaying your benefits because you did not get any checks the previous year. It is not an annual return!
Everyone understands that seniors want to get what’s yours, but waiting until 70 is not the way to do it. You have a better chance of maximizing your benefits with Tarot cards than listening to experts on the issue of setting your claiming date.
There is countless articles and YOUTUBE videos telling you to wait until you are 70 to collect Social Security. I have read and thought long and hard about many of them. But most of them take a complex issue and give a misleading catch all answer. They all use the same tired flawed arguments telling everyone to delay SS without any measured and rational arguments from those who may recommend taking early SS if you retire early. I wonder if they are all written by the same person.