Making the right choice about when to take Social Security benefits is crucial to your financial health in retirement. But many analysts don't take some basic considerations into account when giving information about Social Security, leading to what can be misleading conclusions.
In the following slideshow, Dan Caplinger, the Motley Fool's director of investment planning, looks at how different assumptions about the returns you can earn on invested Social Security benefits can change the correct decision about whether to take benefits earlier or later than full retirement age. Most so-called breakeven analysis simply looks at total benefits paid without taking into account the potential investment income you could earn on those benefits if you invested them. In order to accurately reflect the time value of money, Dan makes some simple assumptions about reasonable returns you could earn and looks at the impact they have on breakeven analysis. Dan concludes that the greater the return you assume, the more sense it makes to take benefits earlier than later.