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Valuing Social Security Benefits As An Asset On The Household Balance Sheet
As a guaranteed income stream that cannot otherwise be liquidated or reinvested, most retirees don’t think of their Social Security benefits as an asset….And in fact, the payments are significant enough that it would take several hundred thousand dollars just to replicate the average Social Security retirement benefit for an average life expectancy. For many retirees, that would be a material portion of their total net worth, it not the largest asset on their balance sheet! Yet unlike most other assets, the value of Social Security is uniquely impacted by its assumptions… where unlike traditional assets, the value is actually higher when inflation rises, and is greater when interest rates are low. As a result, viewing Social Security as an asset actually reveals that it is a highly desirable asset for a retiree, uniquely capable of hedging many risks in retirement that traditional portfolios cannot…Read more…
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