Many retirees default to one of a few common mindsets on when to time your filing for Social Security. Each one of these approaches comes with its own set of assumptions and potential pitfalls.
That’s why we at Brindle & Bay have a perspective that goes beyond the typical break-even calculations to consider a broader, more realistic view of retirement income. Let’s first unpack each of these three default mindsets, and then illustrate how our own thinking applies to timing Social Security.
The “break-even approach” is one of the most popular ways people think about Social Security. It’s a straightforward question: should you take benefits early for smaller checks over more years, or delay you benefits for larger checks over fewer years?
But no matter how you answer the question, the break-even age for most people is around age 80. This approach assumes a perfectly predictable lifespan, and it only works if you “die on time,” which is an undesirable way to frame such an important decision.
The “today money” approach focuses on immediate cash flow. Suppose a couple of retirees determine their desired monthly income is $8,000, and their combined Social Security benefit is $6,000 per month. This mindset suggests they only need to draw $2,000 per month ($24,000 per year) from their investment portfolio.
On the surface, that sounds reasonable and sustainable. But here’s where this approach breaks down: it fails to account for how dramatically those numbers can shift over time.
Let’s say one spouse passes away. Instead of continuing to receive $6,000 in Social Security, the surviving spouse now receives only the larger of the two original benefits — not both. If the couple was receiving $3,500 and $2,500 respectively, the survivor now receives just $3,500 per month, not $6,000. That $2,500 decline in monthly income equates to a sudden $30,000 annual shortfall that has to be filled entirely from their investments.
Inflation is also at play here: even modest 3% annual inflation can quietly double the cost of living over a 25–30 year retirement.
In short, the “today money” mindset ignores the reality that retirement income planning isn’t static. If retirees are only planning around what they need now, they may find themselves in a dangerous position later, drawing increasingly large amounts from a portfolio that hasn’t been prepared for the strain.
The “invest the difference” strategy calls for taking benefits early and investing the proceeds, hoping the growth will outpace the increased benefit they’d receive if they had waited.
This strategy may be theoretically sound, but it also depends heavily on market performance and investment discipline (not to mention the emotional fortitude to stay invested through market downturns).
A More Comprehensive Way To Think About Social Security
Rather than focusing solely on these conventional approaches, we’ve arrived at one question to help move these strategic decisions forward with our clients: What income experience do you want to have during bad times?
This shifts the focus from mere cash flow optimization to full-on resilience. Every retiree needs a retirement income plan that can withstand the inevitable ups and downs of the market.
There are a few other important questions to consider here as well: How long do you expect to live, and how long might your spouse live after you? How much do you value income stability during market downturns? How will inflation and healthcare costs impact your overall retirement spending?
Plan with Confidence
There are no one-size-fits-all solutions to retirement income. If you want to feel calm and confident in the face of an uncertain future and market conditions, your financial plan needs to be bespoke and tailored to you. If that’s a daunting premise, know you don’t have to do it alone.
At Brindle & Bay, we believe that retirement calls for a financial plan that supports your lifestyle in the face of uncertainty. If you’re weighing your Social Security options and want to explore a more personalized approach, click here to book a no-cost consultation with our team. We can help you build a plan that provides clarity and confidence, no matter what the market does.
The client stories shared in this blog post are intended for illustrative purposes only. While inspired by real-life experiences, these examples are composites drawn from a range of client situations and do not represent any one individual. They may be considered indirect testimonials. Actual client experiences will vary. No clients were compensated for sharing their stories.
