This week I’m attending 2 funerals of fellow parishioners at my church. Helen was 72 and Ron was 73 and both were totally unexpected and sudden. This made me contemplate what another friend and bible study companion always states during his morning prayer, “Thank you Lord, for another day not promised”. No truer words can be spoken and reminds me of the importance of living in the moment!
What’s your check out date?
Now does this mean one should claim Social Security ASAP and my answer is absolutely NOT! The greatest risk in retirement is not dying too soon, it’s living too long. One might say isn’t this a contradiction and I would answer YES – NO – MAYBE! Since we don’t know the exact date of our departure and that of our spouses, it’s important to guestimate one’s own mortality based upon health and family history and other variables.
Who Promised You Tomorrow?
Yesterday I was consulting with a couple who were both born in 1958 and will reach their FRA at 66 & 8 months and wanted to discuss their options for claiming Social Security. There both high earners and under the Primary Strategy (highest cumulative lifetime benefits assuming Ron lives to 85 and Helen to 95) they would both wait until 70 before claiming benefits (see attached). Since they are both still working and don’t really need the benefits they thought they’d wait until 70.
GO GO Years, SLOW GO Years and NO GO Years
If one lives long enough, one will experience all 3 phases of retirement!
In August my siblings and I and spouses took a cruise down the Rhine River (highly recommended). I’m the oldest (72) and youngest brother is 62. Thankfully we are all in the GO GO years, but who is to say we’ll all have the ability to experience (walk and climb) 5 years from now, much less 1 year? Our parents retired at age 62, dad died at 87 and mother died at 97, they experienced all 3 stages of retirement. As much as we all plan to stay in the GO GO Years as long as possible that is to a certain extent out of our hands
There is an old saying if you want to see God laugh, tell him your plans!
Hedging Strategy
See the numbers!
Should they both wait until 70 and then claim and meet the same fate as Helen and Ron who died in their early 70’s then the lower of the 2 benefits would be immediately forfeited and the surviving spouse would receive the greater of the 2 benefits!
If Helen were to claim this month (FRA) her check would be $3,157/mo. vs. $4,328/mo. should she wait until 70. However, by claiming now she would receive approximately $124,000 over the next 3 years and 4 months those funds can be used to enjoy and experience (BUCKET LIST) all life has to offer while than can!
Granted she’ll receive less money at 70 had she waited and the breakeven between the 2 strategies is age 80 without taking into consideration the time value of money. As you’ll notice in looking at the attached illustration there is not that great of a cumulative difference between the Primary Strategy (both wait until 70) and having Ron claim at 70 and Helen at 66.
When the only Certainty in Life is Uncertainty, maybe it makes sense to hedge one’s bet?
