The purpose of social security planning for a lot of people is to maximize the amount of money that they take out of social security. Here’s the problem, though: that should not be your goal.

Allow me to go off-tangent and offer a quick word of advice: don’t quit your job just to take social security. Work as long as you can. A lot of people that retire early wish they hadn’t and then find themselves stuck because they can’t re-enter the workforce. Also, it’s better to retire to something than from something. Simply retiring because you hate your job is a bad idea.

Now, back to our topic. Social security planning should be about maximizing your full retirement. The problem with social security planning, though, is that the most common advice is to push off your income until as late as possible. Based on my experience, I’d have to disagree with that.

First of all, where does the cash flow come from if you’re not taking it from social security? Your own portfolio—that’s where. This means you’re eroding your own personal portfolio in order to maximize a pension. Then when you die, that pension goes away. In essence, you’re basically betting on your pension lasting as long as possible, and that’s something you can’t know.

If you take your social security at your earliest retirement age, there’s usually a break-even period of about eight to 10 years before you get back the increase. In other words, if you’re taking $2,000 a month now, and you wait to get $2,500 a month, you’d only get an extra $500 a month. That $2,000 a month multiplied by five years, though, is $120,000. What’s $120,000 divided by $500? You do the math.


Don’t maximize social security—maximize your entire retirement.


The reality here is that you’ve lost out on four or five years of revenue in order to get an extra $500. That doesn’t make a lot of sense unless you’re positive you’re going to live into your 90s. That’s a dubious assumption. Even if you do live into your 90s, the money that would’ve stayed in your portfolio and grown while you’re taking money from social security is going to be a far bigger number than the extra amount you’re going to extract from social security.

Remember—social security is part of retirement planning, but it’s not the whole picture.

If you have any questions about this topic, please feel free to reach out to me by phone or email. I look forward to speaking with you!

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