I tend to think about Social Security as an asset to be managed. I am not sure that other people do, however, since it is impossible to call up Social Security and ask for a withdrawal. Still, the lifetime value of your Social Security benefit is likely to be substantial, and can be dramatically larger or smaller depending on your claiming strategy, timing, and longevity.
Would you rather have a dollar today or a dollar tomorrow? What about one dollar every month or twelve dollars at the end of the year? The majority of us would take the money as soon as possible. This is based on two old economic principles; opportunity cost and the time value of money. We know that having a dollar today rather than some time in the future is more valuable because it means we can use that dollar immediately. This could mean saving, paying off debt, or even investing it for the future. Therefore, as we evaluate something of equal value received in the future, we discount its worth and prefer that same value now. This is relevant to us as taxpayers as every month we are given the option to receive more now or more when we file our taxes (assuming we are withholding too much).
Almost all our engagements and recommendations with clients are Fiduciary. Why does that matter to you? Ironically, many advisors were not required or did not follow a Fiduciary standard. Under current regulations, all advisors are now required to act as Fiduciaries for new recommendations in retirement accounts (for example IRA accounts). However, they were not required to do that until very recently, and your account might be grandfathered under the old, weaker, “suitability” rules.
We had the chance to visit with Scott Stolz, Senior Vice President from Raymond James, and discuss something that is on many clients minds: Social Security. Scott chose to first take us through an understanding of how Social Security actually works. As you probably see, Social Security takes money from your paycheck.