Should You Claim Social Security Earlier Than 70 Despite Having Millions In Pension?

A Marketwatch reader expressed his skepticism over a decision regarding life after retirement to the outlet. He revealed that he has nearly $2 million in pension and earns $75,000 annually from his part-time job, which he plans to retire from in less than two years.

He has no debt or financial issues to worry about except for a smart decision for old age. “When I retire, if I draw Social Security and take 3% annually from our investment income, I anticipate my annual income to be $100,000…What are your thoughts as far as a retirement strategy?” he asked.

Should he wait until 70?

The near-retiree added that he manages a portfolio of moderate to high-risk investments in 90% stocks and 10% bonds worth $975,000 in total. “I’m debating on drawing Social Security at my FRA and investing some of that rather than waiting until I am 70 to draw. I can also start drawing from some of our investments rather than Social Security to increase that benefit amount,” he added.

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He noted that he lives a simple life with his wife, whom he loves traveling domestically and overseas with once a year. From the content of the writer’s mail to the outlet, they are in a financially stable position and would need to keep it so by making the right choice.

Questions Answered

According to the response, most people find it difficult to balance their Social Security and retirement-plan distributions as the sender has commendably done, because they “claim Social Security earlier than their Full Retirement Age, or FRA, to afford their cost of living.” They noted that social security is more “guaranteed” because it is “inflation-protected,” and delaying it would benefit his wife should she outlive him.

However, waiting until FRA would also enable the retirement account to “grow over time untouched.” Per the feedback, it is best to weigh both choices and decide with the help of a financial planner while keeping in mind the implications of taxes, investment returns, and inflation rates. Asset reallocation was also advised to prevent the consequences of market volatility. “It’s great that you’re taking the distribution and claiming strategy so seriously. Now it’s just a matter of the specifics,” the expert concluded.