Personal Finance

Social Security: Taking Benefits at 62 Is Smart, but Not for This Reason

Moreover, the fact that stocks have historically returned 9% is no guarantee they'll stay on the same trajectory forever. In fact, if you look at the demographic trends in the United States -- with baby boomers shifting out of their high-consumption years -- it isn't unreasonable to think that the growth rate in corporate earnings could slow down.

This is impossible to predict, of course, and the market could do just the opposite of what we expect . But the point is that market forecasts cannot be relied upon.

Meanwhile, for every year you delay Social Security benefits -- from age 62 to age 70, when you reach your maximum potential benefit -- you are guaranteed to receive an additional 8% in benefits per year.

If you need to take Social Security benefits early, then, as I've argued in the past , there's no problem with that, even though your monthly checks will be smaller than they would be if you waited. But if you don't need them, then there's little reason not to delay benefits and allow your future payouts to grow over time. A guaranteed 8% annual "return" is hard to turn down.

For people who don't need to take benefits early, then the certainty of larger monthly checks associated with waiting until full retirement or later shouldn't be substituted for the uncertain returns of the market.

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The article Social Security: Taking Benefits at 62 Is Smart, but Not for This Reason originally appeared on Fool.com.

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