With Treasury yields near 4.5%, one couple is rethinking when to claim Social Security. The higher earner's delayed claim to 70 offers a significant survivor benefit, a feature that bonds cannot replicate. High yields ease the funding gap, but interest income can trigger Medicare surcharges and taxability on Social Security benefits. Pre-Social Security years for Roth conversions may offer more long-term value than chasing higher CD yields. Many financial advisors prioritize sales over client wealth, so seeking a fiduciary is crucial. The SEC mandates that fiduciaries act in clients' best interests.
The couple's dilemma is a common thread in retirement forums. With safe income returning, they question whether delaying Social Security is still wise when bonds offer attractive yields. The key factor is the higher earner's claim age, as it impacts the survivor benefit. Social Security provides an 8% increase for each year of delay, up to age 70, which is locked in for the longer-living spouse. This survivor benefit is a unique advantage of Social Security, setting it apart from bonds.
High yields do impact the funding gap, making it easier to bridge the gap to age 70. Short-term T-bills and I-bonds offer competitive interest rates, but interest income can complicate tax and Medicare considerations. Roth conversions in low-income years may be more valuable than maximizing CD yields. The decision should consider the couple's health, earnings gap, pensions, and essential income needs.
A careful analysis is essential, as many Americans are unaware of their retirement readiness. Advisor.com's matching tool connects individuals with vetted fiduciary advisors for personalized financial guidance, ensuring clients' interests are prioritized.
