Social Security

Should You Delay Filing for Social Security Benefits During the Coronavirus Pandemic?


by Alli Thomas

May 7, 2020

Conventional wisdom about the optimal time to start taking your Social Security benefits may vary. But, many retirement experts seem to agree that delaying benefits for as long as possible—at least until you reach full retirement age (FRA)—is the best course of action for most people.

Enter COVID-19.

The coronavirus pandemic has been a financial game-changer for so many people, perhaps especially for folks in the pre-retiree and early retirement stages of life.

The majority of people who have been investing their retirement savings have seen a huge drop in the value of their investments in recent months. People who had planned to live off their investments before filing for Social Security benefits may not be able to afford to do that now.


Does delaying Social Security benefits make still make sense?

Many experts think so. Your benefit amount will increase by 8% per year for every year after your FRA that you delay filing up to age 70. It’s unlikely that you’ll see 8% annual returns on stocks anytime soon. Even if you avoid investing in stocks and stick to less-risky investments (such as bonds or money markets), those returns are nowhere near 8%. Not only that, but the 8% annual increase in your Social Security benefit if you delay filing is guaranteed.

Now, if your life expectancy is shorter than the average—or if you lack savings for basic living expenses—filing for Social Security may be a better option. But assuming your retirement investments have been allocated properly, short-term declines in your investment values should not affect your decision to delay filing for benefits.


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Another concern when considering the early filing decision is the health of the Social Security program itself. We’ve all heard for years that the Social Security trust fund will eventually run out. Last week, the yearly Social Security and Medicare Trustees Report said that this is expected to happen in 2034, if there are no changes to the program. The recent financial aid from the government has caused many people to question the continued viability of Social Security.

But the trust fund accounts for only about 25% of the Social Security program. Most of the funding for Social Security benefits come from payroll taxes. So, even if the trust fund runs out sooner than 2034, that will likely only affect a portion of benefit payments.

Your Social Security benefit is only one part of your overall retirement financial picture. Working with an experienced financial planner can help you ensure that you combine all sources of retirement income in a well-planned and thoughtful way. If you’re wondering whether delaying your Social Security benefits still makes sense now, click here to set up a free, no-obligation meeting with one of our advisors.

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Alli Thomas

Alli Thomas has worked in the financial services industry for nearly 20 years, with a focus on retirement-related investing. She began her career as a FINRA-licensed participant-services call-center associate at Vanguard, and then moved to Principal Financial Group, where she worked closely with employers, assisting with retirement plan set-up and design, selecting appropriate plan investment offerings, and maximizing employee participation through targeted education campaigns and enrollment meetings. Alli has also worked as a qualified 401(k) administrator and registered investment advisor for several small investment firms. She now writes about all things investment- and finance-related, leveraging her extensive experience and passion for retirement planning to help investors make well-informed financial decisions.

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