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A major case for bitcoin ETFs was that financial advisors needed them to direct their clients to invest in the cryptocurrency. Almost six months in, the advisors are sitting out.
We surveyed the CNBC Advisor Council about why that may be — for many, it comes down to time in the market and regulation.
Advisors who never liked bitcoin’s high-risk and speculative nature remain averse to the crypto, but others are preparing to make recommendations one day, with some calling it inevitable.

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A major thesis around bitcoin ETFs was that financial advisors needed regulated funds like them to direct their wealthy clients to invest in bitcoin.
Almost six months after the launch of those ETFs, there are few signs that advisors are clamoring for the funds. Many remain just as averse to bitcoin now as they were before. That doesn’t mean the ETFs were a failed experiment, however. For one, bitcoin ETFs have been hailed as the most successful ETF launches in history, with BlackRock’s iShares Bitcoin Trust (IBIT) reaching $20 billion in assets under management this week, even with advisors sitting out.

“It’s something I’m researching because I think eventually I will recommend it, I’m just not there yet,” Lee Baker, founder and president of Apex Financial Services in Atlanta, said in an interview. “For myself and other advisors, if we get more of a track record, it increases the likelihood that it ends up in the client portfolios.”
CNBC spoke with a dozen members of CNBC’s Advisor Council, which includes Baker, to learn why so many financial planners are still down on bitcoin and bitcoin ETFs, and what could cause them to change their tune. It comes down to two main things: time in the market and regulatory compliance.
“When [bitcoin] gets more regulated, you will see more adoption,” said Ted Jenkin, founder and CEO of oXYGen Financial in Atlanta. “That being said, even if there isn’t regulation, if over time this can prove to be as stable of an asset as a technology firm would be — because my viewpoint on this is it’s early technology more than it is money — you’ll see more adoption.”

Most of the advisors said they’re neither initiating conversations nor fielding client inquiries about the ETFs – and most don’t have more than one client who has made an allocation to the funds. Of those advisors, some are proactively educating themselves about bitcoin investing, while others — often those with an older, more traditional and conservative client base — are more dismissive.
Some of these advisors work with younger clients who have a greater appetite for risk and a longer investment time horizon. They say that their clients were already interested and educated in crypto exposure before this year, and that the arrival of ETFs hasn’t motivated them to jump in.

Performance review
At 15 years old, bitcoin is in a maturity phase comparable to that of a teenager — it has big potential but still comes with a lot of volatility. Bitcoin is up more than 59% this year, and about 230% from its 2022 low that deepened during the collapse of FTX. In the past three, five and 10 years the cryptocurrency has gained 85%, 704% and 10,854%, respectively. It’s also suffered several 70% drawdowns over the years, which not all investors could stomach.
Many hope consistent flows into bitcoin ETFs over the years can lower that volatility, but for now, it’s still a deterrent for some.
“Financial advisors now have a way to give clients access [to bitcoin] that’s safe, reliable and regulated,” said Bradley Klontz, managing principal of YMW Advisors in Boulder, Colorado. “I love it … that it’s a tool in our toolbox for clients who want it. I just don’t see, right now, most firms recommending it because they’re not recommending any asset class, or any particular asset, that has that much volatility.”
Rianka Dorsainvil, co-founder and co-CEO of 2050 Wealth Partners, said that most of her clients prioritize stability and long-term growth over high-risk opportunities, and that the “relatively early stage of bitcoin ETFs in the financial landscape and the ongoing volatility associated with bitcoin” are primary factors keeping bitcoin ETFs out of her investment strategies.
Cathy Curtis, founder of Curtis Financial Planning in Oakland, California, said that she doesn’t know if bitcoin will ever be a stable asset class but that she would consider adding it to client portfolios if it showed stable returns over at least 15 years.
“If it proved itself to be a true diversifier along equities, for example, maybe,” she said. “The history of that asset has not shown me that.”
Apex Financial’s Baker pointed out that investors have decades of software and tools to show them how a certain percentage of a given bond, ETF or other asset in a portfolio might enhance returns or increase volatility and more.

“As a group, we’re fairly conservative and somewhat risk averse,” Baker said. “We are so accustomed to pulling up charts and [asking] how did this thing perform and through what kinds of markets — it’s almost the way we’re wired.”
With a few more years on the market, investors may be able to do similar modeling with bitcoin, he added, which will help advisors warm to the funds. He also said advisors’ embrace is a matter of when and not if.
“At this juncture … everybody should be convinced that [bitcoin’s] here to stay, [they’re] just not understanding some of the metrics in similar terms to how we can look at and value stocks or bonds,” he said. “We just don’t have that underpinning, and that’s an additional reason why the uptake is slow.”
“My guess would be it will be a slow adoption,” he added. “I wholeheartedly believe we will begin to see an uptick or increase in an advisor use somewhere in the next two to three years.”
Not regulated enough
Even though bitcoin ETFs exist in the U.S. now as a regulated investment vehicle, it still isn’t always clear if or when advisors can recommend them, according to Douglas Boneparth, founder and president of Bone Fide Wealth in New York City.
“A lot of this still has to do with compliance offices and what broker-dealer is going to allow what when it comes to advisors and offering ETFs,” he said. “Just because the ETF came out doesn’t mean the floodgates were open or that the ability for them to allocate to it is easy.”
Jenkin said some broker-dealers have approved the purchase of bitcoin ETFs, but restrict how much of it can be bought, and other firms don’t allow advisors to sell bitcoin ETFs at all.
Some say that’s due to crypto’s notorious reputation for fraud, scandal and crime — a situation that gets cleaned up a little bit more every year but no doubt has left a scar on the industry. More point to the industry’s lack of regulation, which increases the chances of consumer complaints, potential lawsuits against broker-dealers and potentially fines from the Financial Industry Regulatory Authority, or FINRA.
“Part of why this still isn’t popular is you’ve got heavy-duty compliance issues within the industry,” Jenkin said. “A lot of firms are very nervous about the communications that financial advisors are having with their clients on digital assets, and none of them want to have violations with FINRA.”
“Most broker-dealers are risk mitigators,” he added. “They want to allow advisors to do things for clients, but they certainly don’t want to have a spotlight shined on them to carry more risk. That’s why you’re seeing there’s such a slow uptake on this.”
Building confidence
Bitcoin and its ETFs need more time in the market to gain trust and adoption by big players like Vanguard, which famously said earlier this year that it doesn’t plan to offer them and won’t shift its stance unless the asset changes to become less speculative.
“That’s coming,” Boneparth said of client confidence. It’ll come with “more time — getting out of the early days into more of the mature days. We’re coming off of years where exchanges have failed – that’s not Bitcoin failing, but it muddies the water [and] people’s trust.”
Until then, the best position advisors can be in is one where they educate their clients, he added.
“Even though bitcoin ETFs fundamentally may present a less risky and more regulated way to invest in digital assets … the association with bitcoin still tends to deter [clients],” Dorsainvil said.
Advisors are likely to be even more deterred by ether ETFs, given the additional complexity of that cryptocurrency’s use cases and functionality. Last week the Securities and Exchange Commission gave U.S. exchanges the green light to list spot ether ETFs, which many investors predict will also have success, but perhaps a fraction of what bitcoin ETFs have enjoyed.
“The ETFs have made it very easy for institutions, from pensions to large funds,” Boneparth said. “That’s really where we’re seeing the bulk of the flows going into these bitcoin ETFs. … It’s still pretty cumbersome at the retail advisor client level.”

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The IRS will expand Direct File, its free tax filing program, nationwide starting in 2025, the agency and the U.S. Department of the Treasury announced on Thursday.
More than 140,000 users successfully filed returns using Direct File during the 2024 season and the pilot saved an estimated $5.6 million in tax preparation fees, the agencies announced in April.
“Direct File is an additional option to filing federal tax returns,” and the agency remains committed to other partners, such as Free File, IRS Commissioner Danny Werfel told reporters Thursday on a press call. 

IRS Commissioner Danny Werfel testifies before the House Appropriations Committee in Washington, D.C., on May 7, 2024.
Kevin Dietsch | Getty Images

The IRS will expand Direct File, its free tax filing program, nationwide starting in 2025, the agency and the U.S. Department of the Treasury announced on Thursday.
“After a successful pilot, we are making Direct File permanent and inviting all 50 states to offer this free filing option to their residents,” U.S. Secretary of the Treasury Janet Yellen said in a statement. “The Treasury Department and IRS look forward to working with states to expand Direct File to Americans across the country.”

Direct File was available to limited taxpayers in 12 states during the 2024 filing season. More than 140,000 users successfully filed returns using Direct File and the pilot saved an estimated $5.6 million in tax preparation fees, the agencies announced in April. More from Personal Finance:37% of Americans paid a late fee in the last 12 months, report findsHiring stays strong for low earners, Vanguard findsWhy it may be time to break up with your financial advisor — and how to do it
“We are also exploring ways to make additional taxpayers eligible to use the system next year and beyond,” IRS Commissioner Danny Werfel told reporters Thursday on a press call. “Over the coming years, our goal is to gradually expand the scope of Direct File to support the most common situations, focusing in particular on tax situations that impact working families.” 

How the Direct File pilot worked

For 2024, the Direct File pilot included Arizona, California, Florida, Massachusetts, Nevada, New Hampshire, New York, South Dakota, Tennessee, Texas, Washington and Wyoming.
The pilot focused on simple filings, including taxpayers with Form W-2 wages, Social Security retirement income, unemployment earnings and interest of $1,500 or less. However, this excluded taxpayers with contract income reported via Form 1099-NEC, gig economy workers and self-employed filers.
Plus, filers had to claim the standard deduction, which was $13,850 for single filers and $27,700 for married couples filing jointly for 2023.

Werfel said the agency will share more details about the expanded scope of Direct File for 2025, including which states respond to the invitation and join, later this year.   

Direct File is an ‘additional option’ for taxpayers

The news about the Direct File expansion comes roughly one week after the IRS announced plans to extend Free File, the agency’s partnership with a coalition of private tax software companies that allow many Americans to file federal taxes for free. 
Free File processed 2.9 million returns through May 11, a 7.3% increase compared to the previous year, according to the IRS.”Direct File is an additional option to filing federal tax returns,” Werfel said on Thursday. “It is not meant to replace other important options by commercial providers who are critical partners with the IRS in delivering a successful tax system for the nation.”   More

Older workers who are still carrying student loan debt may have a harder time saving toward retirement.
The bottom 50% of older earners owe the highest average student loan debts, research finds.

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For most Americans, living well in retirement depends on how much they can save in their working years.
But for millions of older individuals, unpaid student loan debts may put that goal out of reach, according to new research from the Schwartz Center for Economic Policy Analysis at the New School for Social Research.

The research evaluated more than 2.2 million people over age 55 with outstanding student loans, according to the Federal Reserve Board’s 2022 Survey of Consumer Finance.
That includes more than 1.4 million workers and more than 820,000 unemployed people aged 55 and over who had taken student loan balances for themselves or their spouses. The data does not include older Americans who have taken on student loan debt on behalf of their children.
Half of the borrowers over 55 and still working were earning less than $54,600 — a “major financial vulnerability,” the research finds.
Those who had not completed their degrees were more likely to be at financial risk since their incomplete education likely did not increase their earning power. That includes about 14.9% of workers aged 55 to 64 and 17.3% of workers aged 65 and over, according to the research.
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The bottom 50% of older earners — with incomes less than $54,600 — owe the highest average debt of $58,823.
The middle 40% of earners — with incomes between $54,600 and $192,000 — owe an average debt of $48,174.
The top 10% — earning more than $192,000 — owe an average of $33,000.
“Lower-income and middle-income or older workers have the largest amount of debt and are then faced with difficult decisions about whether to reduce their retirement savings, or to work longer and delay retirement to repay their student loans,” said Karthik Manickam, a research associate at the Retirement Equity Lab at the Schwartz Center for Economic Policy Analysis.
For older workers aged 55 to 64, it may take an average of 11 years to pay off their student loans, according to the research. Workers 65 and up may need 3.5 years.
“Older workers do not have decades of future potential work that younger workers have to repay their loans,” Manickam said.

How policy changes can help older borrowers

Older Americans with student loans may not be able to save as much toward retirement if they have a high level of debt relative to their income. Moreover, Social Security benefits might be garnished if a debtor defaults on their student loan.
The research suggests certain policies, such as forgiving student debt; making debt repayment easier; and preventing the garnishment of Social Security benefits to repay student loans, can help reduce the negative consequences of older Americans’ student loan burden.
One plan — the Saving on a Valuable Education, or SAVE, plan, which President Joe Biden introduced last year — may help address the first two goals.
Under that new income-driven repayment plan, federal student loan borrowers may be eligible to forgo making payments or pay reduced monthly sums, depending on their incomes. After a certain period, loans may be forgiven.

Student loan forgiveness has critics who argue that students choose to take on those balances while forgiving debts would shift the burden to the federal government.
Additionally, the Schwartz Center research suggests ending the garnishment of Social Security benefits to repay federal student loans to help protect older Americans’ income.
Social Security beneficiaries who fall behind on their federal student loan payments may see about $2,500 taken from their benefits annually on average, according to the Center for Retirement Research at Boston College.
In March, more than 30 Congressional lawmakers called for ending that practice. It remains to be seen whether that proposal will gain traction.

Workers who are tempted to take on student loan debt they may carry into their later years should carefully consider whether that investment will pay off.
“Pursuing any education, whether it’s later in life or going to college for the first time after high school, has to be about whether or not you can get a return on your investment,” said Douglas Boneparth, a certified financial planner and president of Bone Fide Wealth in New York City.
Prospective students should weigh not only whether they will be able to make their monthly student loan payments, but also whether the education will enable them to increase their earning power.
“If you can’t figure out how that’s going to happen, maybe it’s not a great idea,” said Boneparth, who is a member of the CNBC FA Council. More

The Delaware College of Art and Design announced it will no longer offer classes or confer degrees starting this fall.
Issues with the new FAFSA contributed to a “problem of too few students,” DCAD’s president said, underscoring how important the awarding of federal student financial aid is to driving college enrollment.

Delaware College of Art and Design in Wilmington, Delaware.
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The Delaware College of Art and Design announced on May 23 that it’s set to close, citing low enrollment numbers for the upcoming school year, due in part to issues with the new Free Application for Federal Student Aid.
Experts have continuously warned that ongoing problems with the new FAFSA form have resulted in fewer students applying for financial aid, which could contribute to already declining enrollment.

“Like many independent art and design schools, DCAD faces long-standing challenges related to declining enrollment, a shrinking pool of college-age students, rising costs, and unexpected issues with the rollout of the new Free Application for Federal Student Aid (FAFSA),” the college’s president Jean Dahlgren said in the announcement. The original webpage with the announcement was not accessible Wednesday but can still be viewed through the Internet Archive.
Enrollment at DCAD fell to 129 students, a loss of nearly 10%, between 2017 and 2022, according to federal data.
“The Board of Trustees has worked diligently to find other funding solutions, but none allow us to overcome the longer-term problem of too few students,” Dahlgren added.
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The 27-year-old art and design school in Wilmington, Delaware, will no longer offer classes or confer degrees for the 2024-25 academic year, the school said.

Many colleges are under financial strain

Fewer students today are interested in pursuing any sort of degree after high school, and the population of college-aged students is also shrinking, a trend referred to as the “enrollment cliff.”
The consequences of fewer students and less tuition revenue have put many colleges under financial pressure.
In recent years, inflation and rising costs have also hit small, private institutions especially hard, as more students opted for less expensive public schools or alternatives to a degree altogether, such as trade programs or apprenticeships.
Among those smaller schools, this may be the first college to close that directly referenced the added pressure from the rocky FAFSA rollout, but likely not the last, according to higher education expert Mark Kantrowitz.

Given the current status of FAFSA submissions, the Department of Education is on track to see 1.5 million to 1.8 million fewer FAFSAs submitted this year, Kantrowitz estimated.
This shortfall could cause a potential impending enrollment decline even greater than the one experienced at the height of the Covid-19 pandemic, he said, when college attendance notched the largest two-year drop in 50 years.
Kantrowitz added that college revenue will be broadly impacted, “from tuition, fees, room and board, not just a decrease in financial aid funding.”
For colleges teetering on the brink of insolvency, “even a modest decline in college enrollment could push them over the edge of a financial cliff,” Kantrowitz said.

Further, long-term consequences might still be felt in the years ahead.
“If the students aren’t just taking a gap year or shifting enrollment to community colleges, but instead opting out of college entirely due to the uncertainty surrounding college affordability, the impact may last for four years,” Kantrowitz said.
“It is severe enough that it may cause some four-year colleges to close permanently,” he added.
The Department of Education said providing support to colleges and universities to make sure they have the resources they need to process student records as efficiently as possible, make aid offers to students and encourage enrollment in higher education has been “a top priority,” according to a department spokesperson.
“The department will continue to leave no stone unturned in making sure schools have the support they need and that every student can access the life-changing potential of higher education,” the spokesperson said.
Meanwhile, the Delaware College of Art and Design said it will work with incoming first-year students and the 50 rising second-year students to help them transfer to partner schools, including the Pennsylvania College of Art and Design and the Moore College of Art and Design.
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“Clueless” star Alicia Silverstone said she never buys anything new if she can help it. “We are actual opposites,” she said of Cher Horowitz, the character she made famous.
Excessive online shopping, and returning, exacts a hefty environmental toll.
More consumers are now embracing recommerce, driven by a good deal and a desire to shop in more sustainable ways.

Alicia Silverstone stars in the 1995 film “Clueless.”
Stringer | Array | Reuters

Her character Cher Horowitz may have been best known for her shopping habit, but in real life, “Clueless” star Alicia Silverstone said she never buys retail if she can help it.
“Cher, she is such a consumer. We are actual opposites,” the sustainability advocate and actor told CNBC. “My mantra with purchasing anything: It needs to be used first.”

Silverstone adopted a more sustainable approach to consumption years ago.
“I’ve been fighting the good fight to encourage people to buy used and make it sound cool,” she said.
More consumers are catching on.
“I do think people are getting more concerned about the planet, so they are interested in buying preloved,” said Silverstone, who partnered with eBay to promote its first Recommerce Day, on May 21. “We are not just screaming into a dark hole anymore.”

Online shopping’s hefty toll on the environment

With the explosion of online shopping during the pandemic, a surge in returns seemed like a small price for everyone to pay.

Then, as customers got increasingly comfortable with their buying and returning habits, more shoppers began ordering products they never intended to keep. Nearly two-thirds of consumers now buy multiple sizes or colors, some of which they then send back, a practice known as “bracketing.”
The return rate in 2023 was about 15% of total U.S. retail sales, or $743 billion in returned goods, according to the National Retail Federation’s most recent data. For online sales, the numbers are even higher, with a return rate closer to 18%, or $247 billion of merchandise purchased online returned. 

But all of that back and forth comes at a hefty price.
In fact, processing a return costs retailers an average of 30% of an item’s original price, according to returns solution company Optoro.
“The bedroom has become the new dressing room,” said Amena Ali, Optoro’s CEO. “It’s Pandora’s box, because once you go there, you can’t get back.”
For their part, companies have been quietly attempting to keep returns in check.
Last year, 81% of U.S. retailers rolled out stricter return policies, including shortening the return window and charging a return or restocking fee, according to a report from return management company Happy Returns. Others, including Amazon and Target, have simply told shoppers to “keep it.”
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“Charging for returns is one way to cover a portion of that cost,” Erin Halka, senior director at Blue Yonder, a supply chain management company, told CNBC in 2022. “It also can deter customers from overbuying, since at least 10% of returned goods cannot be resold.”   
But returns aren’t just an issue for retailers’ bottom line.
“Often returns do not end up back on the shelf,” and that also causes a problem for retailers struggling to enhance sustainability, according to Spencer Kieboom, founder and CEO of Pollen Returns, a return management company. 
Also referred to as reverse logistics, sending products back to be repackaged, restocked and resold — sometimes overseas — is “like playing a tape in reverse,” Ali said.
And it generates even more carbon emissions to get those items back in circulation, if they even make it that far. In some cases, returned goods are sent straight to landfills, while only 54% of all packaging is recycled, according to the U.S. Environmental Protection Agency.
Last year’s returns created 8.4 billion pounds of landfill waste, according to Optoro.
“People are perhaps more aware of fast fashion in terms of waste, but the same adage applies to really everything you are returning,” Ali said.

Out of a returns problem comes a liquidation boom

Where there is a returns problem, there is also an opportunity, especially for those in the liquidation business.
“Most retailers do not restock returns. It is way too capital and labor intensive for them to do so,” said Shraysi Tandon, co-founder and CEO of Kidsy, an e-commerce company that resells children’s product overstock, open-box and returned goods. 
However, “returns is an issue they want to fix,” she added, which is why some retailers now sell returns to businesses such as Kidsy that buy products in bulk. “These partnerships are beneficial.”

Consumers can also benefit, while cutting down on emissions and landfill waste.
The environmental advantages now rank among the top reasons shoppers have embraced so-called recommerce, second only to saving money, according to a recent report by eBay. As more shoppers jump on board, driven by a pursuit of value and a desire to shop in more sustainable ways, the stigma around buying secondhand is all but gone.
Over the next five years, recommerce is projected to grow more than four times faster than the broader retail market and hit $276 billion by 2028, a recommerce report by OfferUp found.
While the industry is dominated by clothing resale, 85% of Americans now buy or sell secondhand products, OfferUp found, including electronics, furniture, home goods and sporting equipment, as well as apparel. Children’s goods are a natural fit, Tandon said: “Parents have been engaged in the hand-me-down culture long before a formal marketplace existed.”
Silverstone said that’s how her mom raised her, even if it meant wearing her older brother’s “itchy sweaters.” And that’s how she outfits her son, Bear, who prefers “hip shoes.”
“If I get it used, I feel better about it,” she said of buying the latest hot sneakers.
Even Cher came around to the idea in the end of the movie, Silverstone added, when she led a donation drive at her school. “She has a big heart, so she learned there’s another way.”
In this new series, CNBC will examine what climate change means for your money, from retirement savings to insurance costs to career outlook.
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Cathie Wood’s ARK Invest has taken a stake in Elon Musk’s startup xAI as she deepens her big bet on artificial intelligence.
The fund has invested in nearly 50 companies, most of which are private.
The xAI startup is not the only Musk-led company Wood’s venture fund bets on.

Catherine Wood, chief executive officer of ARK Investment Management LLC, speaks during the Bitcoin 2022 conference in Miami, Florida, U.S., on Thursday, April 7, 2022.
Eva Marie Uzcategui | Bloomberg | Getty Images

Cathie Wood’s ARK Invest has taken a stake in Elon Musk’s startup xAI as she deepens her big bet on artificial intelligence.
ARK Venture Fund has invested in xAI as of Sunday, the St. Petersburg, Florida-based asset manager said in an email to clients Tuesday evening. The fund also invests in OpenAI, the popular player behind ChatGPT, as well as other companies in the industry, such as Figure AI and Shield AI.

The xAI startup is also not the only Musk-led company Wood’s venture fund bets on. The firm has also purchased stakes in Musk’s space company SpaceX and social media firm X Corp., formerly known as Twitter.
The venture fund, launched in September 2022, targets smaller investors who can access the venture capital market through it with as little as $500.
The fund has invested in nearly 50 companies, most of which are private. It comes with a hefty management fee of 2.75%.
Musk founded xAI in March 2023 as a challenger to Microsoft-backed OpenAI and Alphabet’s Google. Musk also co-founded OpenAI. It recently raised $6 billion in series B funding, reaching a post-money valuation of $24 billion. The xAI startup is reportedly planning to build a supercomputer to power the next version of its AI chatbot Grok.
The widely followed Wood has been a big AI bull, saying it’s the most important catalyst in every corner of her disruptive innovation strategy.

She has called Tesla, with its robotaxi ambition, “the biggest AI opportunity in the world.” Tesla is her flagship ARK Innovation Fund’s biggest holding, with a weighting of 11.5%.
Wood also said OpenAI is “at the forefront of a Cambrian explosion” in AI capability.

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Delaying Social Security retirement benefits can dramatically increase monthly benefit checks.
Yet many people do not wait to claim benefits, either because they cannot or would prefer not to.
Experts say some preferred reasons that people give for claiming early often don’t hold up under scrutiny.

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When it comes to claiming Social Security retirement benefits, experts agree it’s generally best to delay.
Yet many people still claim early — either at the earliest possible age of 62 or before their full retirement age.

Those early claims result in reduced Social Security benefits for life.
To get 100% of the benefits you’ve earned, you need to wait until full retirement age — between age 66 and 67, depending on your date of birth.
To get the highest benefit, retirees need to wait to claim until age 70.
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Understandably, some people cannot delay — either due to poor health or financial circumstances.

Yet research also shows many people claim early because they are worried about the program’s future, or they mistakenly feel that can help them get the most of their benefits.
In response to a recent CNBC article on why even waiting a few months to claim benefits can help, some readers had a strong reaction.
“It’s already highway robbery,” one reader wrote. “You just don’t want them [beneficiaries] getting their money back, do you?”
Nevertheless, experts maintain waiting to claim is generally a beneficial strategy.
“In the grand scheme of things, delaying claiming Social Security is one of the safest things that you could probably do to protect yourself over time,” said David Blanchett, head of retirement research at PGIM DC Solutions, the global investment management business of Prudential Financial.
Here’s what experts say to the most common arguments for claiming Social Security benefits as soon as possible.

Investing in the market

“If an individual starts collecting at age [62] and puts the benefits in a S&P index fund for 8 years that individual would be way ahead of postponing collection until the age of 70,” another CNBC reader wrote.
With the S&P 500 index up about 26% in the past year, it is tempting to think just investing in a fund that tracks that index can bring in more money than delaying Social Security.
But there are no guarantees returns will be high.
While the markets may go up an average 10% per year, that amounts to just 7% after factoring in inflation, according to Blanchett. For a balanced portfolio of stocks and bonds, a 5% annual return expectation is more reasonable. In some years, the market may fare better and in others it may be worse.

An individual who waits until age 70 to claim Social Security benefits will receive a benefit of about 77% higher than what they would receive at age 62, according to Blanchett’s research. For every year retirees delay from full retirement age, they may get an 8% benefit boost.
To best gauge the trade-off, experts say it’s most accurate to compare delaying Social Security to investing in bonds rather than equities. The advantage of Social Security benefits is that they are adjusted for inflation and pay income for the rest of a beneficiary’s life.
“If I were going to compare Social Security, I should be comparing to bond yields,” said Joe Elsasser, a certified financial planner and founder and president of Covisum, a Social Security claiming software company.
“If I were comparing to bond yields, then delaying Social Security all of a sudden appears much more reasonable,” he said.

Pass on money to heirs

“You can’t pass your Social Security onto heirs while your 401(k) can be, so [it’s] best to take Social Security early and withdraw less from your 401(k),” a CNBC reader wroe.
When planning for how to coordinate Social Security with other assets, it’s important to consider how other factors — such as longevity and taxes — will affect your retirement income.
“People notoriously underestimate their own life expectancy,” Elsasser said.
If you live longer, bigger Social Security benefit checks will help preserve your standard of living, which may help protect other assets in your later years.
For tax efficiency, it generally makes sense to delay Social Security, Elsasser said.
Withdrawals from traditional 401(k) plan accounts may be treated less favorably than Social Security, where only up to 85% of benefits are subject to federal taxes.
Consequently, it helps to have more Social Security income.
“For many people, delaying Social Security can create a much more tax efficient overall retirement, even if it’s not more tax efficient in the short term,” Elsasser said.

Break-even age

“The person who withdraws at 62 will have the same amount of [money] as the person who withdraws at 72 by the time they both reach 78, their expected date of death,” another CNBC reader wrote. “You only make out if [you] beat the odds and live longer.” The reader referenced “72,” but the highest age to wait for bigger benefits is age 70.
Many Social Security claimants tend to focus on a “break-even age” — the point at which they personally would make out the same if they delay or claim early.
To benefit from delayed claiming, they would have to live past their estimated break-even age.
Yet experts say it’s best to base a claiming decision on an individual’s entire financial situation rather than one metric.
Break-even age can be a valuable reference point, Elsasser said.
But claimants also need to consider their own longevity, he said, which may be better than their parents’ due to improved health care and financial resources.
When couples are making a claiming decision, a higher wage earner needs to consider the longevity of both individuals, which often also supports delayed claiming, according to Elsasser.

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There was a 44% year-over-year increase in the number of Roth conversions during the first quarter of 2024, according to Fidelity Investments. 
Roth conversions transfer pretax or nondeductible individual retirement account funds to a Roth IRA, which provides future tax-free growth.
But “it isn’t a slam dunk for everyone,” because of the upfront tax bill, according to Marianela Collado, a certified financial planner, certified public accountant and CEO of Tobias Financial Advisors.

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Roth individual retirement account conversions are up in 2024 — but there are key things to know before converting funds, experts say.
There was a 44% year-over-year increase in the number of Roth conversions during the first quarter of 2024, according to data from Fidelity Investments. 

Roth conversions transfer pretax or nondeductible individual retirement account funds to a Roth IRA, which provides future tax-free growth.
However, “it isn’t a slam dunk for everyone” because it takes time for tax-free growth to exceed your upfront tax bill, said Marianela Collado, a certified financial planner and CEO of Tobias Financial Advisors in Plantation, Florida.
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Investors need “sufficient assets” outside of retirement accounts to cover the upfront tax bill, warned Collado, who is also a certified public accountant.
You’ll also need to weigh how the additional income during the year of the conversion impacts eligibility for certain tax breaks. Higher earnings can also trigger income-related monthly adjustment amounts, or IRMAA, for Medicare Part B and Part D premiums down the line. (IRMAAs for a given year are typically determined based on your tax return from two years prior.)

Of course, the tax consequences hinge on how much you convert and your tax brackets for the year.

The best time for a Roth conversion

Despite the upfront tax bill, strategic Roth conversions can significantly reduce lifetime taxes or help with legacy goals, said Ashton Lawrence, CFP and director at Mariner Wealth Advisors in Greenville, South Carolina. 
Typically, Roth conversions are attractive during a stock market pullback because you can convert more shares and “you’ll have more tax-free growth on the bounce back up,” Lawrence said.

Roth conversions are also more popular during lower-income years because you’ll owe less upfront taxes on the converted balance. Key opportunities could include after a job layoff or early in retirement before you claim Social Security and start taking so-called required minimum distributions, or RMDs.
Since Congress eliminated the stretch IRA, more investors are eyeing Roth conversions for legacy planning. Since 2020, certain heirs must empty inherited IRAs within a 10-year window, which could mean hefty taxes during “peak earning years,” Lawrence said.
“Nobody likes paying taxes if they don’t need to,” he added.

Older investors can minimize the ‘tax time bomb’

Many baby boomers have a sizable pretax retirement balance because after-tax Roth accounts weren’t available early in their careers, experts say.
In some cases, Roth conversions can help avoid the “tax time bomb” once investors reach the RMD age, according to CFP Wes Battle with Financial Advantage Associates in Rockville, Maryland.  
“Roth conversions are great for multiple reasons,” including tax diversification, possible lower RMDs and inheritance planning, he said.
Some investors also aim to leverage conversions now while there are lower tax brackets. Higher individual tax brackets are scheduled after 2025 once provisions sunset from former President Donald Trump’s 2017 tax overhaul. However, the future of those tax breaks is unclear with pending control of the White House and Congress. More