Dear Dr. Don,
I'm wondering if I should amend federal tax returns for three prior years with a guarantee of $55,000 in refunds. That would in turn reduce two of my highest 35 years of earnings and by doing so, lower my monthly Social Security payment by $250.

I've done the math, and $55,000 works out to about 18 years' worth of monthly payments of $250. In 18 years, there is no way I will remember your answer to know if I did the right thing.

Thank you,
-- Old Person

Dear Old Person,
I'm going to accept your numbers and situation as fact and just focus on the decision between getting the refund and keeping the monthly benefit. I'm also going to assume since you signed your note "Old Person" that you are at your full retirement age for Social Security benefits.

By simply dividing $55,000 by $250 to get 18 years (actually 18 1/3 years), you're ignoring the time value of money. If you're age 66, you could take the $55,000 today, buy an immediate fixed annuity and receive a monthly payment of $326.

If you're married and both you and your spouse are age 66, you could purchase a joint life annuity with the $55,000 and receive a monthly payment of $270. Your actual ages and state of residence will influence the monthly annuity payment.

While it sounds like a win, the immediate fixed annuity doesn't adjust for inflation, while your Social Security benefits do receive cost-of-living adjustments, or COLAs. And, with the survivor benefits available to your spouse, your Social Security benefits have a built-in joint life benefit.

It would take only three years of 3% cost-of-living adjustments for the $250 in Social Security benefits to exceed the $270 joint life payment amount, and nine years of 3% adjustments for the $250 in benefits to top $326. While the 2012 COLA was 3.6%, it was the first COLA raise since 2009's adjustment of 5.8%.

If you're married, I'd suggest keeping the Social Security benefits. If you're single, I'd base the decision on your life expectancy and what you'd do with the $55,000 if you took the tax refund. Like most personal finance decisions, there's not one right answer. You just have to try to figure out the answer that's right for you. I hope my reply helps you make that decision.

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