Friday, August 23, 2013

Why I’m Planning to Take Social Security Early

I love my children and I want them to have a secure financial future.  And while it might not happen, I’d like to further this financial future by way of some sort of inheritance I could pass along to them.  While it’s impossible to see the future and how our family finances will progress along the way, I hope that doing my best to plan for this future could allow me to set our children up well upon our passing.

Part of this planning entails deciding when to take Social Security…that is, if it’s still around by the time I retire in 30 years or so.  However, if it is, my children might appreciate me taking Social Security earlier rather than later for several reasons.

Less Reliance on Other Assets
If I’m able to live off of my Social Security benefits -- or at least use them for a majority of my expenses in retirement -- my dependence on other assets such as retirement accounts and savings could be diminished.  This means that upon my passing, while my Social Security benefits may disappear, the assets that I’ve been able to protect and maintain by relying upon Social Security instead will hopefully be left for my children, something that I’m sure they will appreciate.

Lower Benefits for Me, but Benefits Nonetheless
But taking my Social Security benefits early in an effort to utilize them ahead of other assets could mean that I end up with lower initial payout amounts compared to if I waited to an older age.  However, part of me feels that while waiting to take benefits could have me reaping higher payout amounts down the road, it’s kind of like gambling.  While it might pay off, what if I die at an early age?  I -- and I assume my children as well -- would rather have me get lower benefits than no benefits at all.

The Future of Social Security
My children are likely to pay the same amount of money into the Social Security system regardless of when I take it, so why should they care if I take it early?  In fact, they might prefer me to at least get something out of it if it’s still there by the time I retire, since they might not have the same opportunity.

If the future of the Social Security systems is as “up in the air” as it is right now at the time of my own retirement, it might be worth getting money what I can from it early on.  My ability to get even partial benefits from Social Security could alleviate the strain on other assets, which brings me to my next point. 

A Greater Inheritance for the Children
I didn’t have children not to help them and try to leave them some sort of legacy.  If I only wanted to help myself, why have children?

While nothing is guaranteed in life, especially when it comes to old age and inheritances, I think that by taking Social Security early, I might be able to leave me children more in assets by consuming money from a system that I’ve already paid into and that will return the favor (hopefully) until I die.  As long as I’m financially secure enough to make up any funding gaps between what my Social Security benefits provide and what my expenses consume, I might choose to take these benefits early in an effort to leave me children more in inheritance as long as they are financially responsible adults who I can trust to use the money wisely and to their or their family’s benefit.

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