When Should You Take Social Security?

Social Security gets talked about a lot these days, especially regarding its long-term viability. My view is that anyone currently in their 50s or 60s is probably very safe from substantial benefit changes. Younger workers may need to take more of a wait-and-see approach.

There is no “one size fits all” answer as to when you should take Social Security. Assuming you have enough work credits, you become eligible for benefits at age 62. However, each person is assigned a “full retirement age” (FRA) by Social Security. For people born in 1960 or later, FRA is age 67. For those born before 1960, it is based on a sliding scale. Those born in 1958 reach FRA at 66 years and 8 months, while those born in 1959 reach FRA at 66 years and 10 months.

There are two main consequences of taking benefits before your FRA: permanently lower benefit levels and potential earnings penalties. The main benefit of delaying Social Security past your FRA is a permanently higher monthly benefit.

As you can see, there are several important moving parts in this decision. The best we can do is make educated guesses about when it makes sense to start taking benefits. Factors such as lifespan and future investment returns can influence the outcome, and both of those are obviously unknown.

Here are some important things to consider:

• Health and longevity matter. People with shorter life expectancies may benefit from taking Social Security earlier in order to maximize lifetime benefits.
• The longer you wait, the higher your benefit. Your monthly benefit increases by roughly 8% per year for every year you delay taking Social Security, up until age 70. For example, someone entitled to $3,000 per month at age 67 would receive approximately $3,720 per month by waiting until age 70. Of course, those who wait until age 70 will only benefit if they live long enough to make up for the delayed payments. For those deciding between taking at age 62 versus waiting until age 70, it’s somewhere around age 80-83 that the decision to delay amounts to a greater total benefit.
• Marital status is important. Couples need to plan together. When the first spouse dies, the surviving spouse generally receives the higher of the two Social Security benefits. Delaying benefits can significantly increase the surviving spouse’s lifetime income.
• Employment matters too. Before full retirement age, benefits are temporarily reduced by one dollar for every two dollars earned above the income limit ($24,480 in 2026). Once you reach full retirement age, work income has no effect, and any prior reductions are gradually repaid through a slightly higher benefit.

The Social Security decision is rarely simple, particularly for married couples. Do your homework, read as much as possible, and make the most informed decision you can about what is truly a remarkable benefit.

Fun Fact: Your Social Security benefit is a major asset in retirement planning. A 67-year-old receiving $2,750 per month in Social Security who lives to age 87 will collect roughly $660,000 in lifetime benefits.

Wind Your Watch in Volatile Markets

I was reading a story last week about a commercial airliner that encountered a massive and unexpected bird strike during its landing approach. As the birds pummeled the airplane and warning lights began flashing, the pilots shifted into emergency mode. It would be easy—almost instinctive—for them to immediately take control and react. But that’s not what they’re trained to do when the unexpected happens.

Instead, they rely on an old aviation idiom: “wind your watch.” The phrase dates back to a time when pilots used manual-wind watches to track fuel, time, and distance. In moments of stress, they were reminded to pause—literally take a second—before acting.

While the watches themselves are no longer necessary, the philosophy still holds. “Winding your watch” is a metaphor for responding with calm and intention. It reminds pilots that they have time to assess the situation, evaluate options, and make measured decisions—avoiding panic and costly mistakes.

Despite all of the angst in the world right now, the stock market continues its slow, steady ascent—much like a plane leaving the runway. But sooner or later, the market will encounter the equivalent of a bird strike. The media will whip things into a frenzy. When that happens, think of yourself as a co-pilot alongside your financial advisor.

Avoid panic. Resist reactive decisions. Stop, assess, and remember—you have time and you are in control.

In most cases, winding your watch is the best first response to market turbulence.

 

Fun Fact: Before his legendary 2009 “Miracle on the Hudson” landing, Capt. Chesley “Sully” Sullenberger was a child prodigy who joined Mensa International at age 11. A lifelong aviation enthusiast, he began flying at 16, served as an Air Force fighter pilot, and was a safety expert who helped create training for airline crews.

A Beneficiary’s Divorce – The Unexpected Estate Planning Factor

Many people planning their estate wonder what impact a divorce will have on a beneficiary. The most common question I get goes something like this: “What happens to my son’s/daughter’s inheritance if they get divorced?” To answer that question, we need to review how divorce law works in Michigan. Here are some basics:

Not all states approach property division in divorce the same way. Michigan uses an “equitable distribution” legal framework in divorce. Equitable doesn’t always mean equal. Equitable has more to do with fairness than equality. It certainly does not mean an automatic 50-50 division. Courts want both parties to walk away with a fair property division in light of the circumstances of the marriage.

Michigan divorce courts do recognize separate property, defined as assets (e.g., investments, business interests, real estate, and inheritances) initially owned by only one spouse, either prior to the marriage, or by way of a specific inheritance during the marriage. But just because a judge recognizes an asset as separate property does not always mean it will stay separate property. It could still be something that gets divided, and several factors affect that determination, all within the context of fairness. Here are some of the factors considered:

1. How long ago was the inheritance received? Inheritances received many years ago slowly start to be considered marital property for the benefit of both spouses. Inheritances received closer to the date of the divorce filing are more likely to stay as separate property not subject to division.
2. Was the inheritance commingled with other joint assets? An inheritance that stays intact—in a separate brokerage account, for instance—stands a better chance of not being divided than an inheritance that was combined with other assets of both spouses. Commingling not only makes it hard to identify what’s left of the inheritance, it also can show intent by one spouse to share it with the other. Specific trust language can help avoid a commingling issue.
3. The intention of the person who gave the inheritance is important, too. A will or trust that states: “I give to my son and his spouse…” or “…to my son’s family…” can cause a different property division than one that states: “I give to my son…”.

More general factors of fairness also influence divisions of inheritances. An unhealthy spouse who cannot go back to work will need more, as will a spouse who is awarded primary custody of minor children. Relative financial need is important.

Whenever a judge is required to make a fairness determination, rest assured that his or her discretion will be very broad. Some divorces get nasty simply because one or both parties want to sway the judge’s perception of fairness.

Divorce is often a very unpleasant and disruptive time for the parties involved. If you have a beneficiary whose marriage gives you some concern, make sure you run it by your estate planning attorney so that your documents can be drafted to provide some possible divorce protection for your intended beneficiary.

Interesting (though not so fun) Fact: Among Americans age 50 and older, the divorce rate has roughly doubled since the 1990s, even as overall divorce rates have declined. Sociologists often call this trend “gray divorce,” and it’s especially common among long-term marriages.