Recently Nobel laureate and behavioral economist Richard Thaler suggested that individuals should be allowed to use their 401(k) plans to increase their Social Security benefits. CNBC took a closer look at his proposal and asked other Social Security experts to weigh-in.
Thaler suggested that individuals should be allowed to send the Social Security Administration a portion of their 401(k) benefits and in return receive indexed annuity that’s guaranteed by the federal government at a fair actuarial value.
Covisum Founder and President Joe Elsasser, CFP®, offered this take on Thaler's proposal:
"One important point for individuals to remember: You can already use your retirement funds to increase your Social Security benefits. The easy way to ‘buy more’ Social Security today is to use one’s own IRA money to finance your retirement while delaying Social Security benefits. By doing that, you can dramatically boost the size of your benefits."
Social Security Timing® was created so advisors would have the tools to help retirees make better decisions about when to claim Social Security. In fact, fewer than 10 percent of people delay claiming beyond full retirement age, and most claim early—either at 62 or when the earnings test is no longer relevant. With Social Security Timing, you can help optimize their strategy and increase their retirement value by up to $100,000.