| | | | Dear Reader, | Markets have been digesting two signals at once: inflation that's still being watched closely and a Federal Reserve that isn't rushing to move. The February 13 Consumer Price Index release put fresh numbers on the table, and bond yields moved lower as investors repriced the path of rates. | At the same time, the Fed reiterated on January 28 that it would hold the federal funds rate in the 3.5% - 3.75% range. In that environment, the "guaranteed income" question gets sharper: should you take Social Security earlier, or delay to 70? |
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| | | | | | Why This Matters | Social Security is one of the few paychecks that can last for life and adjusts with inflation. Delaying increases your monthly benefit through delayed retirement credits, which stop at age 70. For many retirees, that bigger check is a form of insurance against living longer than expected. | But break-even math isn't just "How long do I live?" It's also "What does this decision do to my spouse, my taxes, and my portfolio when markets are choppy?" |
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| | | | | Where Things Stand | 1) The basic break-even. If you claim early, you collect more checks sooner. If you delay, you collect fewer checks but larger ones later. Your personal break-even age is the point where total lifetime dollars from delaying finally pull ahead. The right decision depends on health, family longevity, and whether you need income now. | 2) The spousal and survivor factor. For married households, the higher earner's claiming decision can set the survivor benefit. If you're the higher earner, delaying can strengthen the income your spouse may rely on later - often a bigger deal than your own break-even line. | 3) Taxes and Medicare premiums can change the "net" break-even. Social Security can become taxable based on your "combined income"; the IRS notes that up to 85% of benefits may be taxable once income crosses certain thresholds. Separately, Medicare premiums can rise with income through IRMAA; CMS outlines the 2026 Part B and Part D amounts. These don't make delaying "bad" - they just mean you should run after-tax, after-premium numbers. | 4) Sequence-of-returns risk. Delaying often means drawing more from savings in your 60s. If markets fall early in retirement, selling more shares to "bridge" to 70 can permanently weaken the plan. That's why a cash buffer - or a conservative withdrawal plan - matters. |
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| | | | | The Patriot Perspective | Delaying to 70 is most powerful when you're healthy, the higher earner, and want a stronger lifelong floor under the household budget - especially with the Fed still signaling patience, as underscored by recent remarks from Governor Michael Barr. Claiming earlier can be the disciplined choice when flexibility is the priority and you want to reduce the chance of selling investments at the wrong time. | Stay steady,
The Patriot Investor |
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