Should my husband draw Social Security now at age 66 1/2?

My husband and I got married a year ago. I am 58 years old and he is 66. When we married, we both agreed to work until I retired, which is good because neither one of us is wealthy. In the meantime, his parents in Texas recently passed away. We inherited some money and a few low valued rental properties there. He is in Texas, where he hasn't worked for two years now, still trying to get rid of those properties and I am back in Illinois (where we will live) working full-time. The Texas properties are really bad and he is putting in a lot of labor to fix them up. I think he should take Social Security now instead of digging into the money we inherited to live off of each month. My salary pays for my commute, living expenses, insurance, and a small bit for savings if we're lucky. I'm also covering a long-term care insurance policy for us and dental for both of us as well as my health insurance. When he gets back to Illinois, we wanted to buy a house, but instead of even getting a part-time job to supplement our income (which would not decrease his Social Security at this point) as he promised, he is living off of the inherited money and refusing to draw Social Security until age 70. Soon, we won't have enough money to get a house or for any retirement security. At this point in our lives, I don't see how waiting 4 years to get an increase of $200 a month makes any sense. We are losing $15,000 a year to maybe make $2,400 more a year four years from now. I think he should get a part-time job AND take the Social Security. Who knows if either one of us will make it to 70 or be unable to work soon, and we'll both have to live to over 80 to break even with what he's NOT taking. Letting the Social Security sit there with our fingers crossed for a very small increase while we could have income, and maybe even some savings on top of that, and instead spending saved money for our house, seems insane. We are just getting further and further behind. I would like your opinion because this is really starting to get contentious between us. I realize in a normal situation that if you don't need the money, you shouldn't take it until 70 years old, but we DO need the money. I can't possibly cover for the both of us. Besides that, if something happens to his or my health, and neither one can work, we're really in a worse mess. What should I do?

Financial Planning, Social Security, Peri-Retirement
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May 2017
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You will get a number of pretty good answers on this platform about overall financial planning.  I want to address what I think is the 800-pound gorilla in the room that very few financial advisors seem to talk enough about when considering the question of whether to take Social Security early versus deferring.

The Social Security program is on the road to insolvency.  Our politicians keep kicking the can down the road on the major budgetary issues that face this country:  The budget deficit (currently $585 billion), the growing public debt ($19.8 trillion), and the entitlement programs (Medicare, Medicaid, and Social Security).  People in this country will only tolerate these costs ballooning up to a point before demanding some fiscal responsibility.  If the US hits another recession in the next 5 years, tax revenues will go down for the Federal government, further blowing a hole in the budget deficit, increasing the debt, and putting a strain on future funding for entitlement programs.  In my estimation, there is a high probability that in the next decade, the political tide in this country is going to shift towards cutting these entitlement programs as a way to shrink the budget deficit, and that may very well mean cutting Social Security payments.

In other words, Social Security is on the path to going broke.  Now, if a person owed you money, and you were confident that they were going to be broke in the not-too-distant future, and they offered you a partial settlement of what they owed you now, would you take it or would you wait for them to come up with the whole sum later?  You'd probably take 70 or 80 cents on the dollar now, because you'd rather get something now than risk them going totally broke and getting nothing at all.

This is why I almost always advise baby boomers to take Social Security early.  I understand that you can get more cash flow down the line if you wait.  But most people completely forget, ignore, or are unaware that there is a risk of insolvency in the Social Security program, and a risk that Congress decides to slash entitlements across the board.  If you think the Social Security payments are guaranteed forever, you are ignoring the very obvious 800-pound gorilla in the room--that these entitlement programs are woefully underfunded, and you should probably take your benefits now while the programs are still alive.

Best of luck!


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