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Why I'm Walking Away From Social Security -- For Now

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Social Security looks awfully appealing these days, but I'm trying to distance myself from it. It's not that I don't think it's going to be around -- it can be fully funded and Americans will demand it -- I'm just trying to do the right thing for myself.

Let me explain. I just received my annual Social Security statement in the mail. It's like a game show because I have a number of tantalizing options.

-- If I wait until "full" retirement age, which is 66 and change, my benefit will be $2,588 a month. That's enough to cover my mortgage, insurance and property tax bill.

-- Then there's the big tease: If I take Social Security at 62, I'd get to retire earlier, but the benefit is nearly $1,000 less.

-- And there's yet another plum waiting: If I wait until 70, I could reap a whopping $3,300 a month. Social Security pays a bonus of 8% a year in higher benefits from full retirement age until 70.

-- Part of me wants to take the money on the table early, although the math side of my brain says the premium for waiting until 70 is more than worth it. Where can you earn a guaranteed 8% a year on anything?

Here's the emotional puzzle: I don't like the idea of retirement because I can't stand the thought of it. I love my work -- writing, speaking, exploring new ideas. I can see doing it for another 40 years -- if the road's still clear for me and my health is okay.

Right now, I'm at a crossroads, which is less dramatic than I expected. It's akin to when I took my family to see the fabled intersection in Clarksdale, Mississippi, where bluesman Robert Johnson said he met the devil. It was really hard to even see the sign marking the intersection. There was no gift shop.

I have learned a few things, saved some money and look forward to traveling and speaking more. Here are some observations I've found useful:

-- Very little in life is linear. I wish most people could enjoy a smooth upward income curve to retirement. My career and income path, though, looks like the stock market: Peaks and valleys. How do you plan for life's jagged realities? Save as much as you can, spend money on stuff that matters. Fund your 401(k) and Roth IRAs.

-- Plan For Out of Pocket Costs. As a self-employed writer for most of this century, I've had to pay for health care out of pocket, which for my family means a high-deductible policy. During most years, that includes doctor/dentist/optometrist visits and some prescription drugs.

But the real test is when somebody gets real sick, as my wife did a few years ago when she was diagnosed with cancer. After surgery, chemo and radiation, our savings were drained. The only reason I didn't have to tap our IRA was that I had enough cash savings to cover all of our out-of-pocket expenses.

-- Build Your Network. When it rains, it pours when you're down. The year my wife (healthy now) went into cancer treatment, I lost a lucrative column and my income went down to almost nothing. I've been hit with more income hits this past year.

Some time ago, though, I discovered the power of networking and found multiple new sources of income, including a new column. One editor offered me work was from a media outlet that just burned me. It's a small world, but people will often extend a hand when you're struggling, but you have to ask for help. I've been fortunate to have friends.

-- Get Outside of Your Bubble. Despite what self-help guides tell you, nobody ever wants to leave their comfort zone. It's emotionally painful. But the raw truth is instructive.

You may be doing the wrong thing or staying in a dying industry and may not want to acknowledge it. Make an effort to do something different. Talk to people outside of your sphere. They may lead you to profitable opportunities.

-- Ignore the Noise. I've lived through three recessions and as many stock market crashes, yet I ignore the business headlines and stock market averages reported every hour.

Here's what happened during the crash of 2008, when my wife and I saw out portfolio drop by 40%. We waited, determined that we wanted to rebalance into more bonds (and less stocks) and left that mix alone for the past decade.

We've tripled our money by doing nothing and staying put. Better yet, we took some of our gains to replace our roof, heating/AC and sump pump. We didn't go near our principal.

In short, we focused on our goals and stayed in the market. We only evaluate our portfolio once a year. I've asked seven Nobel Prize winners in economics over the years what they do with their money. They all answer me the same way: They leave it in ultra-low cost index funds. They don't trade. That's what we do. Buy the entire market and ignore the headlines.

-- Keep on Learning. The more I write about money, the more I discover how little I know about it's connection to the soul. What's important? Time is important. You can always accumulate endless amounts of money, but your tenure is finite. What you do with it is valuable.

For all of these reasons, I'm going to walk away from the early Social Security option for now. I still have a lot to think about and it will be worth the wait to keep working at some new ideas.

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