Client Referred
One of our clients referred a friend who was 61 years old and contemplating early retirement at 62 to start collecting Social Security. Despite being a conservative individual with a reasonably well-invested 401k, she also had a significant amount of money in a savings account, earning less than half a percent per year. After a thorough review of her financial situation, including her plan for part-time work, we advised against the early collection of Social Security, emphasizing that such a decision at a relatively young age could have long-term implications.
Upon assessing her budget and retirement needs, we suggested a plan that involved utilizing the lower-yielding assets in her savings account to cover expenses initially. This approach allowed her Social Security to grow at 8% annually, along with cost-of-living adjustments. As she approached full retirement age, the decision proved to be financially savvy, resulting in a lifetime income that increased significantly compared to the minimal growth of her savings account.
She made a strategic financial decision by opting for an 8% annual increase in income over the meager less-than-1% growth in her savings account. This highlights the importance of seeking external advice to evaluate one's situation and make informed decisions, ultimately contributing to a more comfortable and worry-free retirement.
