Social Security Timing: Reframing Your Thinking For Better Decision-Making

Retire Smarter with Kevin Kroskey, CFP® & Tyler Emrick, CFA® CFP®

Our brain uses mental shortcuts to help us solve problems. While they can be quite helpful, in some areas they may harm our decision making us. Social Security claiming is often one of these negatively impacted areas.

In this episode, hear Tyler Emrick, CFA®, CFP®, discuss the mental shortcuts (aka cognitive biases) at play when de-ciding to take your Social Security benefits. Being cognizant and acting with a more prudent decision-making process will likely help you realize a better outcome and improved retirement.

Here’s some of what we discuss in this episode:

• Optimism and pessimism bias can skew our judgments when making decisions.
• Present bias and temporal discounting. In the context of Social Security, this means favoring smaller payments now over larger payments later, a decision that can significantly impact long-term financial health.
• The anchoring effect is another critical bias discussed. This occurs when individuals rely too heavily on the first piece of information they encounter—such as the earliest age they can claim Social Security—making it challenging to adjust their plans with new information.
• Tyler explains the concept of delayed retirement credits and how Social Security benefits are designed to be actuarially equivalent, regardless of when you start claiming them.
• How Social Security is uniquely impacted by inflation and interest rates.

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