Spend savings or take Social Security?

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In general, it's better to spend savings and

In general, it's better to spend savings and delay taking Social Security. Photo Credit: iStock

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Act 2

Read the latest news on retirement life, strategies and advice.

I'm 58 and will work four more years. My husband turning 62 this month. He's retired with a $1,200 monthly pension. He has applied for Social Security. His benefit will be $1,500 per month. I read everywhere that we should wait as long as possible to receive Social Security. Almost every month, I take $1,500 from savings to pay bills. Should the $1,500 come from our savings or Social Security?


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In general, it's better to spend savings and delay taking Social Security. True, that's not the best plan if you're both likely to die before age 78. But the average 65-year-old now lives into his or her 80s, and many live longer. Indeed, a 65-year-old couple face a 50 percent chance that one spouse will reach 92.

Social Security income lasts both your lifetimes -- and delaying your application doesn't just give you a bigger initial benefit. It also dramatically increases your income in old age because you receive yearly inflation increases on a larger amount. Let's say John starts Social Security at 62, with a $1,546 monthly benefit. At 85, he'll get $2,822 a month thanks to projected inflation adjustments. But if he delays Social Security until 66, he'll boost his initial benefit by $728 to $2,274 a month -- and when he's 85, it'll be $3,843. (You can compare your own numbers online using the Social Security Administration calculator at 1.usa.gov/1baWHvb.)

Let's say John must take $1,500 a month from savings to postpone Social Security until he's 66. He'll be paying $72,000 ($1,500 x 48 months) for an extra $728 of inflation-adjusted lifetime income for two. That's a bargain. A commercial annuity paying $728 a month for two lives would cost him $158,000 -- and its payments wouldn't be inflation-adjusted.

The bottom line Social Security is the best annuity you can "buy."

Websites with more information 1.usa.gov/1bdnWBR and reut.rs/11MStrQ

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