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Nearly everything I read tells me that I should wait until I am 67-70 before I collect Social Security.
There has been multiple posts about the pros and cons of collecting Social Security at ages 62 vs. 70. But what seems to be missing from the discussion is if the people who wait until they are seventy (70) years old to collect are actually working full time until they are seventy (70) or are actually retired but used other funds to fund their retirement until they are seventy.
Yes, you will get much more money from Social Security in each monthly check if you wait until you are seventy and maybe more over a life time if you live past your low 80s but that is not my question.
What I am asking is what impact it will have to your retirement nest egg over a retirement lifetime-if you retire at age 62 but don't collect SS until you are seventy. You have to pull out $1300 to $1600 per month out of your retirement funds from age 62-70 to cover the amount you would have got from Social Security if you would have collected at age 62. Now that money is lost to investment gain.
I can post all the data later when i get home but figuring spending down from a balanced portfolio delaying until 70 takes 22 years to reach even .
After that the difference grows pretty quickly. Considering there is almost a 50% chance someone in a couple will see 90 that can give you a 5% real return after inflation riveling stocks with no risk.
Figuring tips instead is 19 years.
As far as income, delaying allows a bigger income draw day 1 . The almost 70% bigger check at 70 allows you to refill what you spent .
The fact there is no sequence risk with ss means less money has to be held in reserve for poor outcomes so day one you can spend more . You just need the resources to lay out the money without running to low.
Market sequence risk requires planning around worst case scenario's and that reduces spending ability since the same average returns in different orders make a 15 year difference in how long that money will last.
Ss has zero sequence risk so you get to enjoy a higher draw rate.
Last edited by mathjak107; 04-12-2016 at 06:05 AM..
The math is completely dependent on how long you live. If you die 5 years after you retire, then the math of waiting to collect doesn't work out. Since you don't know how long you're going to live, there's no way to know if your decision will work out in your favor or not. Good luck.
This is looking at it from a safe withdrawal point of view. People who have more than ample retirement assets and/or pensions will probably take a different view, since the annuity aspect of SS has little utility to them.
Which is why many of us plan around what if we live or our spouse lives. Dead is dead so what if i die has far less ramifications then what if we live .
I prefer to worry about living . Insurers can tell us how many of us will die a year but since they can't tell us who our planning assumes it is us who goes on
Considering most folks in america have little retirement savings, not working and delaying is not going to be a choice most folks have. You need the resources to lay out the money while not runnng dangerously low. They would likely need a pension that covers things to delay ss.
This is one of those times having money may not buy happiness but it does buy choices.
Last edited by mathjak107; 04-12-2016 at 06:38 AM..
Considering there is almost a 50% chance someone in a couple will see 90
I think it might even be higher for the likely audience. I think you can correlate the two graphs below and deduce that someone who has the means to retire without SS for a few years is likely to be in the higher income range with a longer life expectancy. If you have that magic million, I would not be surprised if the odds are more like 75% that one of you makes it. Even at a half million, I bet it is over 60%. Keep in mind the first graph is from age 40 so having made it to retirement age the average expectancy would be a little higher (to offset the poor souls who didn't make it from 40 to retirement).
In the end it really does not matter what statistics show except to insurers . As i say , as humans we only have 2 outcomes . Things work out as planned or they don't. Without knowing which side of the statistic you are on the prudent planning is always assume it is you that needs the money and goes on.
None of our planning assumes anything else but us going on to 92-95 whether we do or not . Unless one of us develops health issues what if we die is not in the equation.
But we do have a whole host of other criteria non life expectancy related that we consider. Everything from dependancy on markets , spousal perks to rmd's to taxes are what drives our choices.
Last edited by mathjak107; 04-12-2016 at 06:42 AM..
I think it matters only because more people take a likely outcome seriously than one they think they can dodge. Some people hear "almost (which means less than) 50%" as "unlikely; don't worry about it". I have a BIL like that. If there are 3 possibleoutcomes all with an equal chance, he would probably be relieved because he wouldn't have to prepare for any of them. Yes, there are actual mostly functional adults who use this kind of reasoning.
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Yes, there are actual mostly functional adults who use this kind of reasoning.
