In the United States, our system of providing some financial support to retired people includes Social Security. Hopefully, everyone understands that this is not, nor was it intended to be a sole source of support. Sadly, for some it is.

If you are among the millions who qualify for the benefit, you are likely to begin taking the benefit at age 62. Why? Because that’s when you can start receiving it. Most people start taking it the moment it is possible to do so. Assuming you have the option to wait, this is a very dumb mistake. Every month you delay, the amount you will receive grows. How much? If you wait until age 70 your benefit will be….drumroll please, 75% larger than if you start payments at age 62. Can you increase any other stream of income that much in 8 years? The only way I know to do it is by growing your current income by working and even then, only those who are successful and self-employed are likely to achieve that.

I know, I know, the rationalization is that you might die before you are 70. Maybe, but if you live to age 55 the odds are you will live to at least age 80. If you wait to take the payment those last 10 or more years will be lived with more money.

What is the real reason people take the benefit early? Impatience, a decidedly emotional reason. Does anyone admit that? Few. This is natural, it is human. That said, if you can overcome the emotional pull sufficiently to override it, you could be way better off later on. This is exactly the same process we need to apply when putting money away in our 20’s or 30’s. It’s hard to do but those who build in the behaviors early on end up better off in the long run.

This is exactly the same process executives go through in running their businesses. They may not like to hear it but even they make decisions using emotional criteria that they are not even aware of. We can’t dodge all the pitfalls that exist because we are human but we ought to try to dodge those where the risk is high. In the case of retirement, the risk of running out of money is not only real but the seriousness of that risk is enough to break your heart.

What to do?

1. Get real about your situation.

2. Get advice from someone who is independent. Someone who will not inherit from you. A Certified FInancial Planner™.

3. If you don’t already, get your lifestyle in line. Live BELOW your means. This is the most important thing to do to build financial security.

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