Category Archives: Social Security

What To Do If Social Security Is Your Primary Source of Retirement Income

SSA-image-3My Comments: There is talk in Washington that future Social Security benefits will be cut. How real this is I have no idea. But the fact it’s even talked about suggests the threat today is higher than before. I’m not talking about what might happen in 2035, but in 2017.

If you are not yet 62, much less a few years away from your Full Retirement Age (FRA) you better consider that your future benefits from Social Security will not be as robust as you were led to believe.

Henry K. Hebeler | January 3, 2017

Here’s a do-it-yourself plan for low savers, but be aware than not even a professional planner can foresee all the financial surprises that occur in all of our lives that can come from such things as an elderly parent or other relative who needs help, a collapsing stock market, high inflation, disability, or living beyond our original estimate of life expectancy.

The list of unknowns is large, so we counter that by making a new plan as needed, just as a commander does when the enemy changes tactics. We’ll also cover some common ways to enhance retirement income. That said, a professional planner can add perspective and help on investments, insurance, estate planning and annual budgeting. Click through to see what you need to know.

Determine how much emergency money you will need
A fair estimate might be one year of your Social Security payments. The most likely use of much of this will be for uninsured dental, hearing and sight expenses.These are not covered by Medicare and most Medi-gap policies. Other emergency uses include replacement and maintenance of autos, plumbing, furnace, appliances and furnishings. Emergency funds might be a source to help a relative, make a sudden trip, and other things which might otherwise be unaffordable.

It’s not good to use credit for such items when retired. If you do not have an emergency fund, start building one, perhaps with a part-time job or make an allowance in your retirement budget to build one within a reasonably short number of years. Retirement debts are negative investments — mostly with higher interest rates than the rates retirees get from their portfolio.

I believe it’s good to retire without a mortgage, but if your interest rates are modest and the years to pay off the mortgage are not more than a decade away, I’d not use savings to pay the remaining mortgage. When it does gets paid, they’re be some extra funds available to compensate for inflation, the constant need for home maintenance and ever increasing medical costs.

Calculate the amount of your savings that can be used for annual income

To get that, start with your current savings. Then subtract emergency funds, any debts other than your mortgage, and any known commitments for large cash outlays. Further subtract any savings you would use to reach the age you will start Social Security.

To calculate the annual income you can get from the residual savings, divide the net savings by your remaining retirement life expectancy. You can get a personal life-expectancy estimate from sites such as

For example: $300,000 savings less $100,000 for emergency funds, credit-card debt and delayed Social Security leaves $200,000. If you take $200,000 net savings divided by a life expectancy of 20 years, you would get an annual inflation-adjusted budget from savings of $10,000 if you can invest with a return equal or greater than inflation.

If you will get a pension, calculate the annual value accounting for whatever reductions come from choosing a survival benefit for your spouse
If it is not a cost-of-living-adjusted (COLA) pension, multiply the annual amount by your current age divided by 100. This is an approximate way of making a COLA adjustment because you then will be setting aside part of your pension to be used later to compensate for inflation. Example:$20,000 annual fixed-payment times 65 for this retirement age divided by 100 = $13,000 pension for this do-it-yourself calculation.

Get your annual Social Security income from If you have a spouse, add the spouse’s Social Security income which you can get from the same site with both of your Social Security numbers.

The primary earner must file before a spousal benefit is payable. Usually a lower-earning spouse gets 50% of the primary earner’s full-retirement-age benefit if the spouse starts at the spouse’s full retirement age and less if starting earlier.

Add the annual amounts you can get from savings, pension and Social Security
This is your pre-tax annual source of retirement funds from which you can determine a budget based on the retirement conditions you foresee. Unlike the federal government, you cannot spend more than this, so figure out a budget distribution that fits your income level. If it’s at all possible while still working, try living on this budget for six months to refine the numbers.

The bad news
One of the major differences between budgets when working and retirement is health insurance because employers have paid the lion’s share for you. Now you will have to pay for Medicare, a Medigap policy and the uninsured charges — usually dental, ear and eye-care costs as well as what might be a large deductible before the insurance will pay anything. Fidelity estimates that the total retirement costs for health insurance, Medicare and uninsured bills will be $260,000. This does not include long-term-care, which Fidelity says average $130,000 per couple. This often leads to Medicaid for those who have spent their assets down to a few thousand dollars. Not all doctors and facilities for the aged will accept Medicaid, so if this looks like part of the journey you may have to take, do some detailed research on welfare for your location and dentists willing to do pro bono work.

There’s some hope for low savers

Part-time jobs are a common source of additional income, but become more difficult for the elderly.

Home downsizing, done early rather than late, can add to retirement savings as well as reduced-living costs. Some live with relatives or even friends to reduce cash outflows. Moving to another location might have lower costs and benefit from a nearby relative that might provide some assistance.
By far, the best thing that low-saving people can do is to delay the start of Social Security payments, whether it be by working longer or using savings to support the delay. It is virtually impossible to count on investments to beat the lifetime benefits from the 6% to 8% increase each year of Social Security delay plus an inflation boost, especially when the generous spousal and survivor benefits are included. The primary earner gets a 67% lifetime boost in Social Security income when starting at 70 instead of 62. Further, it’s impossible to beat Social Security’s longevity benefits with insurance. And Social Security benefits from a lower tax rate.

Few people know that even after you have started Social Security, you can suspend Social Security payments as long as you are more than your full-retirement age, but less than 70 years old. Each year of suspension will increase benefits by 8% from the payment amounts the year suspension began. And each of those years will bring lifetime inflation increases. See for more information.

A Primer on Social Security Spousal Benefits

SSA-image-3My Comments: For many millions of us, the monthly Social Security check keeps us housed, fed, and clothed. This is something society has provided for it’s elder citizens since civilizations appeared on the planet. The way it’s accomplished has changed, but the basic premise has not.

Why is that some we have put in charge of rule making have concluded this is a waste of their money? Why did we put them in charge in the first place? How many of us have to starve or simply find a way to die quickly before common sense prevails?

The reality is a Republican has introduced legislation that could very easily put Social Security back on track to remain viable for another 50 years. Do you think it has a chance of passing? What follows is my weekly attempt to help anyone better understand the workings of our Social Security system. I’ll report on the proposed legislation as the next Tuesday’s roll around.

by Robert Powell | December 9, 2016

Q: I am 69, and I started drawing my Social Security benefits when I was 66. My husband, who is 62, is still working. My question: Can he draw on my Social Security benefits (receiving 50%) until he is 66? Can we get the forms on the Internet? He works the third shift and asked if I could help him since Social Security offices are not open at night. — Carolyn Farlow, Reno

A: Bad news times three.
First, if your husband takes spousal Social Security at 62, he doesn’t get 50% of your payment, he only gets 35%, because of early filing, says Andy Landis, author of Social Security: The Inside Story: An Expert Explains Your Rights and Benefits. “He would have to wait until 66 to start the Social Security to get the full 50% payment,” Landis says.

Second, Landis says if your husband files before 66 he has to file for both the spousal and his own Social Security. “That means there would be a permanent reduction in both kinds of payments,” he says.

And third, since your husband is under 66, his work can reduce his Social Security even further, says Landis.

After all those cautions, your husband might still choose to file for Social Security, says Landis. If so, you can get started at Apply for Benefits. Before you do, you might run your situation through a free adviser such as that found at the Financial Engines website.

Says Landis: “Congratulations for planning ahead.”

Getting 88% More from Social Security

SSA-image-3My Comments: 88% seems like an irrational number. Whether it is or not, and depending on how you want and expect your life to play out, the dollars you get from Social Security are likely to contribute greatly to your financial peace of mind and standard of living down the road. If you don’t make sure you understand how this works, you are likely to have regrets before it’s all over.

Jean Folger | December 7, 2016

If you could get 88% more from Social Security benefits, then you would, right? As the majority of Americans rely – at least to some degree – on Social Security benefits to fund their later years, it seems like a no-brainer. To do it, however, you need a basic understanding of how benefits work and the steps you can take to maximize them.

The biggest danger – and opportunity – comes if you’ve had a gap in your life that means you don’t have 35 years of earnings on your record when you’re planning to start your benefits. That’s the important finding of a new working paper from the Center for Retirement Research at Boston College.

According to the paper, 46% of women and 15% of men could replace a zero-income year by working until age 63 instead of 62, if they’d been planning to retire early. And if late-career income can replace a zero in your benefits calculation, you could lock in a higher benefit. The benefit becomes staggering if you also work – and wait to collect – until you are 70.

Women vs. Men
Spending an extra year at work to ensure that you have a full 35 years of earnings on your record can boost your benefits in two ways: You’ll have more earnings factored into the Social Security calculation, plus you’ll delay receiving benefits for one more year. If you start receiving payments before your normal retirement age (which falls between age 65 and 67, depending on the year you were born), your benefits will be permanently reduced. What’s more, every year you wait beyond normal retirement age until you turn 70 increases your benefit by 8%.

According to the Center for Retirement Research paper, a woman could boost her benefit by as much as 88% by replacing a zero-income year (by working an additional year) and by waiting until age 70 to collect. For men, a similar scenario would result in an 82% bump.

“Women stand to benefit most from working longer because they tend to have more zeroes in their earnings records,” Matthew Rutledge, a research economist and author of the paper, told CNBC. On average women spend 29 years in the workforce, compared with 38 years for men. The difference? Women take an average of five-and-a-half years away from work to care for children and another 1.2 years to care for an older adult.

As the paper explains, if late-career earnings increase your average indexed monthly earnings (AIME) by $1 (AIME is the average of the highest 35 years of wage-inflation-indexed earnings, divided by 12), your benefit will increase by 90 cents if you have very low career earnings, by 32 cents if you’re like most workers, and by 15 cents if you’re a higher earner.

Particularly likely to benefit are stay-at-home parents, those who have suffered a long-term illness or injury, and those who otherwise have gaps in their careers. “We were really surprised at how many people have zeroes in that top 35, especially women,” said Rutledge to CNBC.

Women vs. Men
Spending an extra year at work to ensure that you have a full 35 years of earnings on your record can boost your benefits in two ways: You’ll have more earnings factored into the Social Security calculation, plus you’ll delay receiving benefits for one more year (remember, your benefit goes up 8% each year that you wait past normal retirement age).

According to the Center for Retirement Research paper, a woman could boost her benefit by as much as 88% by replacing a zero-income year (by working an additional year) – and by waiting until age 70 to collect. For men, a similar scenario would result in an 82% bump.

“Women stand to benefit most from working longer, because they tend to have more zeroes in their earnings records,” said Rutledge to CNBC. On average women spend 29 years in the workforce, compared with 38 years for men. The difference? Women take an average of five-and-a-half years away from work to care for children and another 1.2 years to care for an older adult.

Should You Wait to Collect?
Even if you don’t have a zero-income year, waiting to collect can pay off. Of course, delaying won’t be the right choice for everyone, and a number of factors must be considered before making any decisions, including:
• Current cash needs
• Health and family longevity (how long you expect to live)
• Other sources of retirement income
• Work plans during retirement
• Future financial obligations
• Potential Social Security benefit amounts

The Bottom Line
To know where you stand, get a copy of your Social Security statement to review estimates of your future retirement benefits, your earnings to verify the amounts on record and an estimate of the Social Security and Medicare taxes you’ve paid. The statement lists your earnings by year, so you’ll be able to count the number of years you have on record to help you determine if spending an extra year or two in the workforce would boost your Social Security benefits during retirement. Pay particular attention to how many zero-income years you have, if any.

Keep in mind, though, that you may have access to benefits based on your spouse’s (or ex-spouse’s) earnings record – which could be larger than you would be entitled to even if you worked those couple of extra years.

Don’t Make These 5 Social Security Mistakes

My Comments: My time these days is consumed by holding Social Security Benefits workshops and the resulting strategy sessions held with those who attend these workshops. I’m busier than I’ve been in a long time.

What follows are the 5 points made by the author in the referenced article. Some you may already know about, but as today is Tuesday, it’s my weekly effort to bring some light to this complicated issue.

1. Not planning for retirement, including Social Security income

2. Filing for benefits at the wrong time

3. Assuming you won’t get benefits

4. Not maximizing your base benefits

5. Not coordinating with your spouse

To read the full article, which is not very long, go HERE…

Women Failing To Max Out Social Security Benefits In Retirement

SSA-image-3My Comments: Social Security is well named. It provides financial security and because it is so pervasive, it carries a social legitimacy that is hard to argue against.

Looking after the elderly has been a social mandate among humans forever. And given that women tend to outlive men, the social needs of women after a certain age carries a special mandate.

This country, in keeping with social norms found across the globe, introduced Social Security in the 1930’s. It is a complicated and diverse project, one that needs to be understood to fully benefit from what it offers. This might help.

Warren Hersch on October 13, 2016

When to begin taking Social Security is an important decision for all soon-to-be retirees, but more so for women than for men.

That’s because women receive (on average) reduced lifetime earnings and income from retirement accounts like 401(K)s and company pension plans. Add to this one other important fact: Women tend to outlive their male spouses, forcing many to rely on their own financial resources in retirement.

That brings us back Social Security. The longer women wait to begin receiving benefits, the higher their income stream will be. On this score, most female retirees are failing to maximize the payout, one that can ensure a large enough nest egg to carry them through the proverbial Golden Years.

These were the conclusions reached by the Nationwide Retirement Institute in a new online survey of 909 U.S. adults over age 50. People in the survey pool were either retired now or plan to be in the next 10 years. The “2016 Social Security Study,” conducted by Harris Poll on behalf of Nationwide, included online interviews with 465 women, among them 301 who are currently retired and 164 who plan to retire in the next 10 years.

The report finds that women, on average, expect Social Security to pay more than half (56 percent) of their expenses in retirement. But among those currently receiving Social Security, only 17 of the survey respondants, or 5 percent, maximized their monthly check by waiting to claim at age 70 or later. In contrast, 8 in 10 retired women now collecting Social Security benefits took those benefits early, locking in a lower lifetime income.

“Too many women retirees have no retirement income outside of Social Security,” Nationwide Retirement Institute Vice President Roberta Eckert said in a press statement. “And even for women that do, the fact that they live longer makes maximizing Social Security benefits extremely important.”

Among the report’s key findings:

  • More than a third of women (35 percent) were kept from doing the things they wanted in retirement. One reason: health care expenses, which prevented nearly one in four (24 percent) women from pursuing retirement objectives.
  • Looking back, nearly 1 in 5 (17 percent) of women who are now drawing Social Security wish they could change their decision and file later. Of those who would not change their filing decision, 39 percent say an unforeseen life event compelled them to take it early, including unplanned health problems (17 percent).
  • More than one in four women currently drawing Social Security (30 percent) say their Social Security payment is less than they expected. Women who have yet to collect Social Security, on average, expect to get $1,527 in monthly benefits.
  • On average, women retirees are currently collecting $1,153, and those who started taking Social Security early report receiving just $1,084.
  • Only 13 percent of women say they received advice on Social Security from a financial advisor. However, nearly 9 in 10 women surveyed who work with an advisor (86 percent) say their Social Security payment was as expected or more than they expected.
  • About three in five women (61 percent) admit that if their financial advisor could not show them how to maximize their benefit, then they would switch to an advisor who could.

WHY IT MATTERS: Social Security

Piggy Bank 1My Comments: A critical percentage of my monthly budget is covered by Social Security. You can argue that it shouldn’t have to be this way and you may be right. But for many millions of us, it IS this way.

Society has come to rely on it, and with the way our republic has evolved, we strongly believe that one role of government is to provide a financial safety net for those of us in the latter stages of our lives. Just as we believe another role of government is to provide a safety net to protect all of us, young and old, against outside threats that would cause us harm. To solve that existential threat, we have the Army, Navy, Air Force, and the Marines. In the same manner, to solve the problem of destitution among the elderly, we have a system we call Social Security.

From time to time, as population dynamics change, threats emerge that threaten the viability of Social Security. We are seeing one now which should result in lots of discussion about how to best deal with this threat. Fortunately, we have a democratic republic which allows us to express ourselves nationally and choose from among candidates for public office those who will work in our best interests. At least, that’s the plan.


WASHINGTON (AP) — THE ISSUE: More than 60 million retirees, disabled workers, spouses and children rely on monthly Social Security benefits.
That’s nearly one in five Americans. The trustees who oversee Social Security say the program has enough money to pay full benefits until 2034.
But at that point, Social Security will collect only enough taxes to pay 79 percent of benefits. Unless Congress acts, millions of people on fixed incomes would get an automatic 21 percent cut in benefits.

Most older Americans rely on Social Security for a majority of their income. Monthly benefits average $1,237.

The candidates have said little to acknowledge the issue, even though it’s a main driver of the government’s long-term budget problems.

Democrat Hillary Clinton has proposed expanding Social Security benefits for widows and family caregivers. That would worsen the program’s finances. She says she would preserve Social Security by requiring “the wealthiest” to pay Social Security taxes on more of their income.
Unusual for a Republican, Donald Trump has promised not to cut Social Security. His campaign has suggested he’d revisit the program after his tax-cut plan boosts economic growth.

Social Security’s financial problems might seem far off. But the longer Congress waits to act, the harder it will be to save Social Security without dramatic tax increases, big benefit cuts or some combination.

Here’s why:
Once Social Security’s trust funds run dry, the program faces huge shortfalls that get bigger and bigger each year.

In 2034, the program faces a $500 billion shortfall, according to the Social Security Administration. In just five years, the shortfalls add up to more than $3 trillion.

Over the next 75 years, the shortfalls add up to a staggering $139 trillion. But why worry? When that number is adjusted for inflation, it comes to only $40 trillion in 2016 dollars — a little more than twice the national debt.

Why is Social Security facing these problems?

In short, because Americans aren’t having as many babies as they used to. That leaves relatively fewer workers to pay into the system. Immigration has helped Social Security’s finances, but not enough to fix the long-term problems.

In 1960, there were 5.1 workers for each person getting benefits. Today, there are about 2.8 workers for each beneficiary. That ratio will drop to 2.1 workers by 2040.

Despite the program’s problems, Social Security could be preserved for generations to come with modest but politically difficult changes to benefits or taxes, or a combination of both.

Some options could affect people quickly, such as increasing payroll taxes or reducing annual cost-of-living adjustments for those who already get benefits. Other options, such as gradually raising the retirement age, wouldn’t be felt for years but would affect millions of younger workers.

All options carry political risks because they have the potential to affect nearly every U.S. family while angering powerful interest groups.
Liberal advocates and some Democrats oppose all benefit cuts; conservative activists and some Republicans say tax increases are out of the question.

But if Congress acts fast, changes can be made gradually, sparing current beneficiaries while giving younger workers time to adjust.

Each year, Social Security’s trustees implore Congress to act. Here is what they said in this year’s annual report: “Lawmakers should address these financial challenges as soon as possible. Taking action sooner rather than later will permit consideration of a broader range of solutions and provide more time to phase in changes so that the public has adequate time to prepare.”

Should I Delay Taking Social Security?

SSA-image-2My Comments: When do you plan to die? If you can’t answer that question, and instead assume you will live a long and productive life, then chances are you’ll want to delay the start of your monthly social security checks.

There are, however, valid reasons beyond an early trip to the grave to justify taking them sooner rather than later. Among those reasons are you can’t stand your job, your health is eroding as a result of your job, you have successfully accumulated enough savings so that you can easily say ‘take this job and stuff it’, and probably some more.

by Walter Updegrave @CNNMoney October 12, 2016

I understand that if I delay taking Social Security, I’ll receive a larger benefit. But while I’m waiting for that bigger benefit, I’ll have to withdraw more from my retirement savings, which means I’ll miss out on the investment gains those larger withdrawals would have earned. Given those lost investment earnings, am I really better off by waiting for a bigger Social Security check? –M.A.

It’s true that if you retire but wait to take Social Security to qualify for a bigger monthly check down the road, you’ll have to replace the income you would have received from Social Security had you taken it right away. Which means you’ll have to draw more from savings. So initially at least, the value of your nest egg will decline faster than it otherwise would have due to those larger withdrawals.

But while waiting for a bigger Social Security check will indeed result in a loss of investment earnings potential on your savings in the short-run, remember that you’ll be able to reduce the withdrawals from your nest egg when those bigger Social Security payments kick in.

So to gauge the effect on the value of your savings by starting Social Security early rather than later, you have to take a longer view. And you have to consider what you think you can reasonably earn on your retirement assets as well as how long you might live.

Here’s an example: Let’s assume you plan to retire at 62, at which point you qualify for a Social Security benefit of $1,500 a month, or $18,000 a year, an amount that will increase with inflation each year. And let’s further assume that you have $750,000 in savings from which you plan to withdraw an initial 4%, or $30,000, a figure you’ll also increase by the inflation rate each year. If you go through with this plan, you’ll have annual income of $48,000 ($18,000 in Social Security plus $30,000 from your nest egg) that will rise with inflation to help maintain your purchasing power throughout retirement.

Or, you could choose to postpone Social Security in order to qualify for a bigger benefit later on. Generally, your Social Security benefit rises by roughly 7% to 8% for each year you delay between age 62 and 70, after which you receive no increase for waiting. So if you hold off claiming benefits for four years until age 66 — the full retirement age for people born between 1943 and 1954 — you would receive $2,000 a month in today’s dollars, or $24,000 a year, which is a third more than what you would get at 62.

But if you decide to hold off for a higher benefit and still want to match the $48,000 in annual inflation-adjusted income above, you would have to get that entire amount from your savings for the four years until you begin collecting that higher Social Security benefit.

There’s no doubt that, initially at least, your nest egg will be smaller and thus have less potential to generate investment earnings if you opt to wait for the larger Social Security benefit. After all, you’ll be withdrawing $48,000 a year adjusted for inflation instead of $30,000. But after four years, the withdrawals from savings required to hit your annual income target will drop off by roughly half when your higher Social Security benefit kicks in. And at that point and every year afterward, you’ll be withdrawing about 20% a year less than what you would withdraw from savings with the lower Social Security benefit.

So the question is, if you opt to wait for the higher Social Security benefit, how long would it take until the lower withdrawals that start after four years of retirement and continue afterward allow the value of your nest egg to recover and eventually exceed what its value would be had you opted for the lower Social Security benefit that started sooner? Or, to put it another way, how many years does it take for you to come out ahead by waiting for a higher Social Security benefit?

The answer depends in large part on how much you think you can earn on your retirement investments after inflation. Basically, the higher the real, or inflation-adjusted return, you earn, the longer it takes to come out ahead waiting for the higher Social Security benefit.

For example, if inflation cruises along at roughly 2% or so a year and your investments earn 6% — a real, or inflation-adjusted, return of about 4% — it would take until age 83 or so for you to come out ahead by opting for the larger Social Security benefit. In other words, you’ll end up with the same retirement income plus a larger nest egg as long as you make it to age 83. If, on the other hand, inflation runs at 2% but you earn, say, 7% on your retirement investments — a real return of about 5% — it would take another few years, until age 86, for the higher Social Security benefit option to pay off.

Of course, you could delay taking benefits even longer in hopes of a still higher Social Security payment. In the scenario above, for example, waiting until age 70 to collect rather than age 66 would result in a benefit in today’s dollars of $31,680, compared with $24,000 at 66. But holding off from age 66 to age 70 would require more years for you to come out ahead. Assuming an annual real rate of return of 3% to 5%, you would have to live until your mid-to-late 80s to early 90s to be better off waiting for the higher benefit.

Given those ages, does it make sense to hold off for a higher Social Security benefit if doing so might leave you with a smaller nest egg unless you live into your early-to-late 80s? Obviously, that depends a lot on the state of your health and whether you come from a family that has a history of long lifespans. But generally people nearing or entering retirement in decent health have a pretty good shot at living into their mid-80s and beyond.

For example, a 62-year-old man in average health has a 53% chance of living to 85, a 34% chance of making it to age 90 and a 26% shot at making it to age 92, while a 62-year-old woman’s chances are 64%, 46% and 37% respectively. The chances are significantly higher for 62-year-olds in excellent health. You can see your chances of making it to various ages based on your current age, sex and how healthy you are by going to the American Academy of Actuaries’ and Society of Actuaries’ Longevity Illustrator tool.

A few caveats: Postponing Social Security probably isn’t a good idea if poor health is likely to shorten your life expectancy (although it can still make sense if your spouse will be depending on your benefit after you die).

Delaying also may not be a smart move if doing so would cause you to deplete all or virtually all of your retirement savings, leaving you with no savings to fall back on for unanticipated expenses and emergencies. (If that’s the case, however, you may not have adequate savings to retire and thus should consider working longer to bulk up the size of your nest egg.)

I’d also caution against overconfidence when it comes to investing. I get lots of emails from people who tell me they’re better off taking Social Security early and investing it rather than waiting for a larger benefit because they’re confident they can earn a high rate of return. People can disagree about what constitutes a realistic rate of return for someone in retirement. But given today’s low yields and predictions of modest returns in the years ahead, I’d say that a real return of 3% to 4% a year—that is, the return in excess of inflation—is probably reasonable for most retirees. You can shoot for higher gains, but doing so inevitably means taking on more volatility, which raises the possibility that your nest egg could be so decimated by a severe market setback that it might never completely recover.

Clearly, deciding when to take Social Security is no simple decision, especially for married couples, who may be able to boost their benefits by coordinating when they claim. So at the very least it makes sense to familiarize yourself with the options available to you, which you can do by reading the Boston College Center For Retirement Research’s Social Security Claiming Guide. For help in sorting out those options, you may also want to consider checking out a service like Maximize My Social Security or Social Security Solutions, both of which rely on sophisticated software programs to make their recommendations.

Or you may want to consult a financial planner who can also factor the effect of income taxes into the analysis (which, to keep things relatively simple, I didn’t do in the examples above).

But the bottom line is this: If you can manage it, you’re generally better taking Social Security later rather than sooner, as a higher benefit that’s pegged to inflation acts as a form of longevity insurance that can help you maintain your standard of living throughout retirement, regardless of how the financial markets and your retirement investments perform.