An article in the New York Times makes an interesting point: people don't appreciate their Social Security benefits as much as they should because they don't understand the true value of them. For most, Social Security is just another government program, subject to all the usual gripes about how Uncle Sam can't do anything right.
How Much Would It Cost To Buy Your Social Security Retirement Benefits?
But, this article demonstrates the actual cash value of those monthly retirement checks. Social Security retirement benefits are equivalent to an annuity, or an
agreement by a third-party to pay you a set amount of money each month. Per the New York Times, if a 65-year old man wanted to buy an annuity that is equal to what Social Security will pay him for the rest of his life ($1,375), that would cost more than $450,000. If that same man waited until age 70 to start his Social Security retirement benefits, an annuity paying $1,375 each month until he died would cost $1,000,000.00
You Are Rich!
These numbers give you a new perspective, right? Did you realize you own an asset worth between $450,000 and $1,000,000? I'm guessing the answer is no.
How Does 8% Per Year With Zero Risk Sound?
Consider a companion argument about Social Security retirement benefits. At present, US Treasury bonds are paying little more than one-half of a percent per
year. But, if you delay taking your Social Security retirement benefits from age 62 until age 70, you are getting an 8% return, each year. And, you are getting that huge return without any risk at all; the payout is guaranteed by the full faith and credit of the United States of America.
Talk To Your Own Financial Advisor
Remember, I am not a financial advisor. Do not make any decisions based on what I say. Rather, talk to a money manager and then plan your retirement strategy.