Episode 125: Mailbag – Should I take Social Security Early?

Today’s Prep:

Is paying off the house a worthwhile reason for taking Social Security early? Can life insurance create retirement income? David answers five very different questions from the mailbag in today’s episode.

(Click the featured times below to jump forward in the episode)

Equipping Points:

Any given week in David’s office covers a wide variety of clients and questions. On today’s episode of the podcast, we take five different questions from the mailbag that similarly, cover a wide variety of topics.

Al wants to know if he should start taking his Social Security at 62 to help pay off his house before retiring. David says some of it comes down to how long you’re going to live and whether or not you have a spouse. The longer you wait to start taking Social Security, the more they are going to send you. What does that dollar amount difference really come down to? Where is the break-even point?

Diana heard about a strategy that uses life insurance to create income in retirement. Is this a legitimate strategy? David says it only really works if you start it in your 40s and 50s. There are good uses for life insurance in later age brackets but not this one. David says this isn’t likely a DIY strategy but best used for a particular demographic of people.

Victoria’s husband wants to leave a lot of money as a legacy for their kids but she’s worked hard and is tired of scrimping and saving during her retirement. What is a reasonable amount to leave as a legacy? There are a few factors that may weigh into this decision. For some, they would rather leave a legacy to charity. It’s important to determine your goals instead of leaving this decision to chance.

Ron anticipates a market crash any day now, so he has half of his IRA in cash. How long should he wait to reinvest it? David says this is market timing, which is almost always a bad idea. Time spent in the market beats timing the market. Use some sort of indicator to determine a time when a probability of a significant downturn is high. People really like it when the market is going up, but they hate losing money.

April and her husband plan to take care of each other as they get older. How much long-term care coverage do they really need? The older you are, the more expensive it is to get long-term care coverage. If you look at the numbers, consider the possible costs you could face. Decide in your 50s and 60s (if possible) on your long-term care strategy. There are alternatives to long-term care insurance that can still provide long-term care coverage.

Do any of these questions relate to your financial planning? Listen to the entire episode or use the timestamps below to skip to a particular question.

[1:34] – Mailbag: Should I take Social Security early to help pay off the house? 

[7:12] – Mailbag: Can you use life insurance to create income in retirement?

[8:48] – Mailbag: How much should I leave as a legacy vs. enjoying now?

[12:08] – Mailbag: When should I reinvest my money?

[16:51] – Mailbag: How much long-term care coverage do we need?

Today’s Takeaway:

Maybe your legacy has more to do with charitable giving than leaving it to heirs or to people in your family.

– David Dickens

Additional Resources:

PODCAST: 4 Terms from the Financial Dictionary

PODCAST: How To Claim Social Security Benefits of an Ex-Spouse

PODCAST: Are You Counting On Social Security?

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