When Should I Take Social Security? | Taylor Sohns

Taylor Sohns (0:00)

The political party doesn't matter. The American economy is so innovative. It is an organism that change and mutates and adapts to any set of rules that you put in front of them. Companies weather the storm over time. Don't let your political opinion and political biases as to the agenda of one party versus the next dictate the way you invest.

Tyler Gardner (0:23)

Hello friends, this is Tyler Gardner, welcoming you to another episode of Your Money Guide on the Side, where it is my job to simplify what seems complex, add nuance to what seems simple, and learn from and alongside some of the brightest minds in money, finance and investing. So let's get started and get you one step closer to where you need to be. My guest today is Taylor Sohns, a CFP and proud owner of more financial credentials than most people have kitchen gadgets. Taylor spent over a decade on Wall Street, working at some of the biggest investment firms, you know, the ones that build the ETFs, mutual funds and hedge funds we all pretend to fully understand. These days, he's the co-founder and CEO of Life Goal Wealth Advisors, an independent financial advisory firm that helps real people build lives aligned with their values. That background, 12 years inside the machine, now operating outside of it, makes him uniquely qualified to talk about the good, the bad, and the occasionally cringe-worthy side of the financial advisory business. And that is the primary reason I wanted to bring Taylor on the show in the first place. He is incredibly, refreshingly, and wonderfully honest about what you can and should expect from the world of financial advising and asset management. I am thrilled to offer you a wide-ranging and thought-provoking conversation with Taylor Sohns.

I think that one of the things that drew me primarily to wanting to have this conversation with you is that out of all the advisors and investment managers and portfolio managers that I know, you are perhaps the only person, other than myself, as a caveat, who believes in the arguments very strongly that you should take Social Security at 62 So today, I want to kind of unpack this idea of, is there a right answer? Is it a black and white question? Can you start by telling me just a little bit about what led you to challenge this idea that I believe is relatively traditionally inherited with a lot of financial advisors, that you should just wait as long as you can. What led you to say, you know what? I'm going to try to throw that on its head for a minute.

Taylor Sohns (2:53)

Yeah, to be clear, if I wasn't legally obligated to put a dollar in Social Security, I would not.

So let's start out with that point. But really, the numbers just come back to the math at the end of the day. The math states that if money is handled responsibly and taken at 62 versus taken at full retirement age, you wind up beneficially impacted by taking it earlier on. That's just simple compound return math. And that's exactly what the Social Security organization is doing in general, is investing your money and knowing that they are going to have law of large numbers, a relatively consistent return pattern over time. And they're going to pay you out according to that. I would rather take it out myself. One, giving myself the flexibility if I need it. But if I don't need it, then invest it myself. And I think a responsible human being in general can do better compounding those returns and putting themselves in a position where they will never, ever, ever, ever break even regardless if they grow to 200 years old.

Tyler Gardner (3:53)

And pause on that one because when you say handled responsibly, I know I'm talking to someone who has worked in finance, who works with investment management. For you, I think it's very straightforward to say, I'll handle it responsibly. I know how to invest it. But how would you position that argument for someone who says, Taylor, I don't necessarily know how to get my 7% year in, year out. What would that argument become for the audience member listening who's a little more skeptical that they could get those same returns?

Taylor Sohns (4:24)

Yeah, and the reality is you have to face the facts. And the facts are 7% doesn't happen in perpetuity, regardless of what you invest in. So I think long term, you can trust that 7% is a modest, reasonable return to expect. With that, how do you go about getting it? There are a couple very easy ETFs in the market that can be purchased that are multi-asset ETFs. So it doesn't mean you're investing in the S&P 500 It doesn't mean that you're invested in crypto. It doesn't... It's a combination of all of those things under one umbrella managed by one of the largest organizations in the world, a firm like BlackRock, a firm like Franklin Templeton, T. Rowe Price, whomever that has the experts doing the investment on your behalf. And this is a one ticker symbol option in order to get you that diversified blend of assets that should over time get you 7% with a modest assumption.