Retirement and Starting Social Security Should Not Be Synonyms

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Social Security Start Date – Choose Carefully

I often find myself on the Social Security website searching for answers on behalf of our clients. It is a frustrating undertaking. In fact, even though I am on the Social Security Administration website quite often, I still find it confusing. I can’t imagine how someone finds meaningful answers if they don’t look at it all the time.

For example, the way they intertwine the word ‘retirement’ with when Social Security starts is just annoying, like you can’t have one without the other. You can retire and choose not to start your Social Security benefits. It often (but not always) makes sense to use other sources of income, like IRA withdrawals, and delay the start date of your Social Security benefits. But the way the wording on the Social Security website makes it sound, you would think your retirement date and the start date of your benefits must go together.

I have found that their website isn’t the only one that accidentally intertwines ‘retirement’ with when certain types of income would start. A good example is if you are about to retire and you are eligible for a pension from your employer. Sometimes they will make you start by a certain age, but usually you have the option of delaying the start of your pension income. Once again, your retirement or stop working date doesn’t have to coincide with the date you start your pension.

Retirement and starting income from sources like a pension or Social Security should not be synonyms. If you need a longevity hedge, or if you want to structure your income in a tax efficient manner, you’ll want to put some thought into where your income should come from in the first few years after you stop working. Starting Social Security and pensions right away may be the least efficient thing to do.

By Kim Morton, CFP®