Social Security Q&A: When Should Gen X & Y Start Thinking About Social Security Decisions? Now!

Source: Forbes

Social Security may be your largest or one of your largest assets. How you manage it, by deciding which benefits to collect and when, can make an absolutely huge difference to your lifetime benefits. And those with the highest past covered earnings have the most to gain from maximizing their Social Security.

I’ve been answering questions and writing columns about Social Security each week for the past two years on PBS NEWSHOUR’s website. The editors at Forbes asked me to post a Q&A each day from those columns. To see all my columns, please go to my software company’s site,, and click More Press below the WSJ quote.

Today’s question is about when Generations X and Y should start thinking about their own, and their parents’ and perhaps even their grandparents’ Social Security decisions. It highlights the effects of Social Security decisions on generational wealth transfer.

Larry Kotlikoff: I receive some 50 questions each week from readers of my column about Social Security. Virtually all of these questions are from people that are in their late 50s or older. This is shocking for two reasons.

First, the fact that so many people are asking so many often basic questions means they really haven’t much of a clue about the most user-unfriendly retirement system in the world — our Social Security System.

Second, the baby boomers’ children — members of Generations X and Y (also called the millennial generation) — are leaving their parents’ and, in some cases, grandparents’ Social Security collection decisions entirely up to their parents and grandparents.

Big mistake. Let’s consider Jay, a 30 year-old who has 62 year-old parents, Hal and Selma. If those parents lose tens of thousands of dollars, if not hundreds of thousands of dollars of lifetime Social Security benefits by taking benefits at the wrong time, guess who is going to pay the piper?

If Hal and Selma run out of money, the first person whom they’ll hit up for support is likely to be Jay. And Jay may have no choice when it comes to helping his parents. It’s not as if Hal and Selma have to directly ask Jay for money; they may just have to make Jay smaller gifts or leave him, when they die, a smaller bequest than would otherwise have been the case.

In short, if Hal and Selma screw up their Social Security decisions, the net flow of bucks from them to Jay can decline to a trickle, even if it doesn’t reverse direction.

So if you’re in Generation X or Y, get involved in deciding when and what your parents should do before they need financial help or you discover your inheritance is far less than expected.

Your parents and grandparents may think it’s their Social Security benefits and solely up to them to decide how to manage or mismanage them. Not the case. It’s actually “your” Social Security benefits just as much as it is theirs that’s on the line. So I recommend you pull up one or more of the reputable software programs, such as our software, that can be run online and start the conversation like this, “Dad/mom, just ran this cool program for you. It’s says you can make a bundle with this Social Security strategy. Is that the one you’re following?”