He’s always been a strange uncle and now he’s saying he wants YOU to help with a few chores around the house. But nothing is ever easy with this guy.  He offers to pay you twenty dollars in two years or thirty dollars in five years. Pulling out five different charts, he says his payment plan is all very simple, and points to numbers like a mad scientist.    Words like “indexing”, “inflation”, and “credits” fly like spittle from his mouth. Cautiously you back away, hoping against hope that he will put himself to sleep with his ranting.  You mumble that you hear someone calling, and turn: tumbling, fleeing, running, sprinting.  You’re safe.  For now. Sadly, most Americans approaching retirement don’t have this option.  They must confront the intricacies of Uncle Sam’s Social Security head on.  And while it would take a novel to fully explore the pros and cons of different filing strategies, I hope to analyze one of the more common ones: out-investing Social Security. The strategy goes like this: take Social Security at the earliest possible age (62) and reinvest the benefits, with the intent of using market returns to exceed the penalty for starting benefits early.  There are some advantages to this tactic.  It creates an asset reserve that can be used for expenses or gifting during the retiree’s lifetime.  If the retiree dies young, he or she will have the benefit of having received more Social Security Security and more investment returns.  And even if they live a long life, excellent returns on their investments may overshadow the loss to Social Security benefits. However, there are several counterarguments. The first is that Social Security itself offers very competitive returns.  Each year benefits are delayed after 62, they will increase anywhere from five to eight percent.  This is simple interest rather than compound, but over an eight year period the difference isn’t severe.  To get similar average… | Read More »