The 4 Reasons To Take Social Security Early – Debunked

I received an email from a Subscriber that there was a number of posts on Bogleheads about my book “Retire WIth The Wellington Fund”.  Some of the posts were questioning why I did this or did that.  So I wrote a response, figuring they’d appreciate my point of view for the book.

When I submitted my post it had to be approved by the moderators.  Not only was in not approved but I was subsequently PERMANENTLY banned!  Not sure how this could construed as ban-worthy but so be it.  The world of trigger-fingers to ban things that don’t submit to a certain way of thinking goes on.

I don’t really care as I actually haven’t even gone to that website in years.  But now we know Bogleheads seems to be run by ban-happy mods.


Hey folks, the reason I wrote the book is simple… Wellington Fund was founded in 1929. No other funds go back that long, to include the Franklin Income Fund or the Income Fund of America.

As such, it’s interesting to see how it performed during Depression years, Inflation years, low inflation – low growth years. There was no S&P 500 index fund, never mind a balanced index fund back then to consider.

However, I do compare the Wellington to a hypothetical SP 500 with cash scenario to show the devastation of inflation on bonds that occurred during the late 60s to early 80s.

Conversely, the DEFLATION of the 30’s helped Wellington immensely because of its bond exposure, whereas the SP got stomped. I also look at Japan in 1990s, comparing the Nikkei to the Japanese 10 year. The reason I do that is to emphasize that bonds MAY save you in low-inflation/deflation times, but they’ll kill you during inflation.

For retirees it’s simply not about growth anymore. Thus a 10 year time frame of growth matters not. It’s drawdown. And Wellington held up just fine…most of the time. Again, not during the 66-82 years. I suggest in the book that people make an assessment of where we are going in the future, more inflation or less, ala Japan. If we go Japan Wellington should be just fine for a retiree. If we go to a high inflation, Wellington won’t work well. I personally believe Japan-lite is our future.

As far as editing, all my books are self-published. I had 4 of my Youtube subscribers edit this one for me. Not professionals and certainly nothing fancy. But, frankly, I don’t care. It’s the ideas I’m trying to convey… for people to say “hmmm…never thought of it like that…” That’s all that matters. Encourage critical thinking. ========================

Oh, needed to add the reason I used Wellington as opposed to Dodge and Cox or other funds is that I like Vanguard. I worked there from 98-00, got to shake Bogle’s hand, he signed my book “Common Sense on Mutual Funds’ and as such I favor Vanguard over all else.

Secondly, in my career, I’ve had a chance to meet a couple of the PMs over at Wellington too. They were exactly what you’d expect from folks who align with Vanguard. Humble, passionate and no-nonsense. Lastly, will Vanguard perform the best? nope. Will you know that in advance? nope

It’s Mind-Boggling…

…The negativity people have towards Social Security.

Every video I do on Social Security draws out the Negative Nellie’s. It’s like there is this fundamental need to hate on the program that is responsible for the bulk of Americans retirement income. I don’t get it. ( See my most recent video on Social Security:  “The 2nd Biggest Social Security Mistake” here.)

I suppose some people are just not happy no matter what.  If you dropped an ounce of gold in their laps they’d say “What’s this? What’s this? I wanted TWO OUNCES!  Take it back!”

The negativity revolves around 4 things primarily it seems. 

1. Overestimating Cost of Living Adjustments (COLAs)
2. “my grandfather was waiting to receive his retirement at 65 fifty years ago. He passed from an unknown ailment at the time. So, he received none of his retirement. Apparently you expect to live A very long time.”
3. Social Security is a Ponzi scheme
4. I can generate a better return than Social Security

Let’s go into each of these now.

Overestimating COLAs

This is always fun for me. “Your COLA percentage of 2.4% is optimistic, guy. Have you seen the last 10 years of Colas?”  Probably the most negative comments are for my COLA assumptions.

Now, I didn’t just pull the COLAs out of the air.  The 2.4% COLAs are from the Trustees report itself. If you want to use a different COLA, that’s fine. I will use the Trustees report as it’s the best guidance we have.

Will the COLAs be 2.4% over the next 10 years? No one has ANY IDEA and, as such, to use another number is completely SPECULATIVE.   If you are going to do that then what will you use for Medicare premium increases?  Again, are you going to speculate or will you use the CMS guidance?

I choose to use the CMS guidance there too, roughly 5.5%.  BUTTTT, if you insist in looking at the last 10 years, well, you’d then project only a 2.34% increase in Medicare premiums because that’s EXACTLY the increase in Part B from 2011 to 2020.

Be my guest.  However, I have a sneaky suspicion those who gripe about my COLA assumptions for Social Security are completely ignorant about the previous 10 years Medicare Part B increases.  (As if they are not interconnected! BWHAHAHA!). I can almost assure you these same people will use far-fetched numbers on health care cost increases all the while discounting COLAs on Social Security.

It’s a double-whammy. Medicare costs skyrocket, Social Security benefits hardly increase.  But ultimately what it is for these folks is a need to be negative.  It’s so easy to be negative and cast shadows. But man, the minute someone says, “maybe there’s a different way to look at this”, it’s like calling their God a fake. “How DARE you challenge my dark outlook!”


This is another issue I have with the Negative Nellie’s.  When it comes to Social Security they say “take it early, you may not live past 70”. BUTTTT, I can almost assure you, many of these same people will also say “You can’t retire because you’ll have no money once you’re 95.”

Their being negative on retirement planning is specific to the issue being discussed.  For Social Security, they want you to take it NOW because you probably won’t live long enough to enjoy any of it if you take it later.  But for everything else, you’ll run out of money, sitting in a nursing home drooling in a wheelchair at 93 years old.

See how that works?  When you’re negative you can create negativity for ANY situation.  It’s fun. And even better you can share your negativity to others. YAY!

Look folks, of all people, I’m the one who most says using a 30 year retirement plan projection is quite unrealistic. A 65 year old man today is not likely to live until he’s 95. And as such why are we running numbers for 30 years?  Doesn’t make sense.  It is a conservative approach so I get that we’d want to do that…but be consistent for Heaven’s sake!

Are you running numbers that assume a 30 year retirement? Yes? Then doggone look at taking Social Security LATER!!!

If you are running numbers that assume you die at 80 then, by all means, run numbers where you’re taking Social Security earlier.  I don’t care how you do it but be consistent!

The issue is that many of us, no, maybe not you, but many of us will live into our 80s, even mid 80s.  If that is you, what is the best time to take Social Security? Well all other things being equal it’s LATER, not earlier.  This really isn’t a debate regarding Social Security.  The actual debate is in point 3 below.

Social Security is a Ponzi scheme (and other variations)

The list for this type of anti-Social Security thinking is long.  “Social Security won’t be there for me!” “It’s a Ponzi scheme!” “It’s bankrupt!”  Etc.

There really isn’t much one can say to argue against these points, actually. Social Security IS a Ponzi scheme. No two ways around it.  Social Security is in a fiscal mess.  Can’t deny that either.  And as such the way it’s financed now does raise a concern for future beneficiaries.

HOWEVER, the student of politics that I am,when has the government ever taken money AWAY from the largest voting bloc – i.e., Senior Citizens?  Name one time please.

So, the idea that the Federal Government is somehow going to go in there and get rid of your benefits seems absurd to me.  As a Generation X’er, I suppose one could say “But Josh, you’re part of the ‘Baby Bust’ so you don’t have as much political pull as other generations.”

Definitely truth in that. But people who are at retirement age vote in much higher percentages than those young whippersnappers who we keep having to yell at to “Get Off My Lawn!” Politicians, like electricity, follow the path of least resistance.  They don’t want a bunch of retirees, with nothing else to do but watch Matlock reruns showing up at their townhall meetings.  See Rostenkowski, Dan.

I’m not worried about crafty politicians taking my benefit.  If you want to worry, again, be my guest. Seems you could worry about more realistic things happening though, like how you’re going to heat your home with Solar Photovoltaic once that’s mandated.

You can invest better than Social Security

Maybe. This is premised on the idea of taking Social Security early to allow your own investments to earn more than what you’d get by delaying Social Security.

It’s quite a risky proposition actually. You may indeed do better than Social Security.  But at what cost? To beat Social Security you’re going to need to have a rate of return higher than 10%.  How did I get that? The increase in benefits you get in NOT taking the benefits plus the COLAs.

To get a return north of 10% you’re going to have to take a heck of a lot of risk, i.e., ALL STOCKS.  What happens when you invest in stocks? Well, remember, 2000,2001,2002 and the first quarter of 2003.  Remember October 2007 – March 2009. Remember Feb 2020-March 2020.

Good times…good times.

For someone in an accumulation phase, me, who is adding money to my portfolio every two weeks, the down markets don’t bother me.  For someone in retirement though, who is actually drawing income from his investments?  YIKES!  A whole different ball game.

Could you do better? Sure. But it’s all a crap shoot. Just read Burton Malkiel’s “Random Walk Down Wall Street.” It’s all luck, my friends.  And as such I don’t recommend one gamble with their retirement assets.

Just my two cents of course.  You need to do what is best..FOR YOU.

I’m just here to lay out the evidence for my default position, which is to take Social Security later.  Is this advisable to everyone? Of course not. But it’s certainly advisable to most.

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