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Monday, July 23, 2018

I find it rather curious that baby boomers, many of whom, in their youth, decried the accumulation of wealth and the materialism of their parents, are the first generation in history to regard Social Security not as the safety net it was intended to be but rather as a pot of gravy to pour over their already meaty investment portfolios.

I’m not saying this is a bad thing. In fact, it is just the opposite. People have always been encouraged to plan for their retirement. And baby boomers have, by and large, done a good job of that. Social Security was never meant to be a person’s sole source of income in retirement. Instead, it was meant to be one leg of the proverbial three-legged stool that should prop up your retirement nest egg — the other two legs being a pension or IRA account and whatever savings or other investments you are able to accumulate throughout your working life.

It’s just that all this focus on Social Security as an investment, sometimes even as a gambling stake, is still a relatively new phenomenon — especially to a guy who spent most of the last 40 years helping folks sign up for Social Security. And almost all of those people simply applied for benefits at 62, or maybe 65 — and just let the checks start rolling in without giving it too much thought. A Social Security check was simply something you got in your old age, and you used that check to pay the rent or buy groceries.

Today, more and more folks are trying to “game” the system — doing their utmost to squeeze every last nickel out of their Social Security investment. They are putting off taking Social Security until age 70 in order to get a 32 percent “delayed retirement bonus.” Many are claiming benefits as a “dependent” husband or wife off of their spouse’s Social Security account at age 66, and then living off that smaller amount until age 70 when they switch to their own retirement account — with that added bonus. Until the law was recently changed, others were filing for reduced Social Security benefits at 62 and investing every dime of that money while they lived off of other retirement accounts. Then at age 66, they would pay back all the benefits they received and file a new claim to get full benefits from that point on. They came out ahead of the game because they were able to pocket whatever interest they earned on the benefits received between age 62 and 66. The government real ized they were essentially providing interest-free loans to wealthy retirees, so they put a stop to that practice.

Again, I am not saying that treating Social Security as an investment is bad. Whatever you get from Social Security is your money, after all. And if you want to work within the rules to get the highest return out of that money — well then, more power to you.

But I have been more than a little taken aback by the obsession some people seem to have gambling with their Social Security benefits. People who delay their Social Security until 70 are throwing away tens of thousands, some approaching one hundred thousand dollars, in Social Security benefits, betting that they will live into their mid 80s to “beat the system.” But I’ve got to wonder, even if they live that long, will they really be able to enjoy their Social Security “winnings?” Lots of folks are taking that chance. And I can tell from the tone of their emails that they’re really not sure they are making the right wager.