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I personally don't use the argument of which way will I get the most total money out of SS. I tend to look which way will I have the most fun, where fun is determined by having money to spend. If you are feeling healthy and under no pressure to have fun now, rather than waiting until FRA, I would wait and get the extra cash flow. But if you feel your life expectancy is not going to be long, take it now.
One other way of looking at SS is the present value of future cash flows, and doing that tends to favor taking SS early rather than late. It is like saying a bird in hand is worth two in the bush.
I think what MS is saying is: the break-even point on taking SS at 62 versus 67 years is about 13-16-years. This is when the total reduced-rate amount received from 62-on, would equal the total higher-rate amount received if one waited until 67.
I agree. I ran the numbers some years ago using several different payouts and the crossover line was always 80 years old.
HOWEVER.
Will the subject be saving 100% of the SS check? NO.
Will SS increases keep pace with COL? NO.
Do expenses increase as we get older? YES.
So with 20:20 hindsight I recognize that I made the same error as MS does. Wait until 66 if possible. Unless you are in horrid health or come from a short-lived line, or hang glide or race motorcycles for a living.
Otherwise, in the real world of monthly bills, more money = more money.
I agree. I ran the numbers some years ago using several different payouts and the crossover line was always 80 years old. HOWEVER.
Will the subject be saving 100% of the SS check? NO.
Will SS increases keep pace with COL? NO.
Do expenses increase as we get older? YES.
So with 20:20 hindsight I recognize that I made the same error as MS does. Wait until 66 if possible. Unless you are in horrid health or come from a short-lived line, or hang glide or race motorcycles for a living.
Otherwise, in the real world of monthly bills, more money = more money.
Wabbit is cowwect. Unless you plan to die before half of the people of the same age and sex as you, you're better off deferring social security for as long as possible. I personally plan to wait until age 70, but I'm lucky enough to have assets to sustain me until that age.
The big risk with taking social security early is that you will live longer than average, and by then, your odds of being able to make money elsewhere is pretty slim. If you die early, you've got bigger problems than having not received as much from social security as you could have by taking it early. If you die later, having more money is always a positive. For me, the magic break-even number is 82; if I live longer than that, I'm money ahead by waiting to collect. Well worth the risk, IMHO. And if I'm wrong, who will I complain to?
If you die early, you've got bigger problems than having not received as much from social security as you could have by taking it early. If you die later, having more money is always a positive. For me, the magic break-even number is 82; if I live longer than that, I'm money ahead by waiting to collect. Well worth the risk, IMHO. And if I'm wrong, who will I complain to?
Like you, I'm planning on waiting till 70. I'm almost 66 now and collecting Survivor benefits on my late husband's record, but mine will be higher.
People in my family tend to live very long lives; Mom died 2 years ago at age 85 but Dad is 87 and still in decent shape for 87. My feeling is that if I "lose" by dying before the break-even age, I will not have outlived my savings and DS and DDIL will receive a VERY nice legacy.
I looked at all the scenari and the decided to make sub-optimal choice.
I took SS early at age 68 even though my parents both croaked at 95.5.
I wanted the money.
We have enjoyed 2 trips to the Iberian Penninsula.
I looked at all the scenari and the decided to make sub-optimal choice.
I took SS early at age 68 even though my parents both croaked at 95.5.
I wanted the money.
We have enjoyed 2 trips to the Iberian Penninsula.
And there's absolutely nothing wrong with your having made that decision; the risk comes from someone making an ill-informed decision. The problem is, none of us has all of the information necessary to know the absolute correct decision to make, since none of us know how long we will live. But aside from the longevity aspect, the rules surrounding SS get pretty complicated due to marriage, divorce, or death of a spouse; for those folks, it is absolutely worth spending the forty bucks mentioned earlier for software that will help you figure all of this out.
Wabbit is cowwect. Unless you plan to die before half of the people of the same age and sex as you, you're better off deferring social security for as long as possible. I personally plan to wait until age 70, but I'm lucky enough to have assets to sustain me until that age.
The big risk with taking social security early is that you will live longer than average, and by then, your odds of being able to make money elsewhere is pretty slim. If you die early, you've got bigger problems than having not received as much from social security as you could have by taking it early. If you die later, having more money is always a positive. For me, the magic break-even number is 82; if I live longer than that, I'm money ahead by waiting to collect. Well worth the risk, IMHO. And if I'm wrong, who will I complain to?
there is nothing inherent in delaying that says you will have more money either to spend or in balance when all aspects are considered .
if we compare the odds between taking ss early and not spending down a balanced portfolio and losing all future compounding on that money vs life expectancy risk and delaying ss we see the following odds .
to equal each other out , one in a couple needs to live to 90-95 . at 90 it is that point that the roi on ss is about a 5% real return and those odds are 47% , but to see 6% real return , one in a couple has to live to 95 , those odds are just 19%
the odds of a balanced portfolio hitting 5.80 as an average real return (that is after inflation ) are 36% .
so there really is not a big difference in amounts at the end of the day between the two going by statistics as a couple . taking ss early does have slightly better odds of leaving the bigger balance. so it really amounts to are you more comfortable with more market risk or more longevity risk ?
for a single the odds greatly favor early ss and staying invested .
I looked at all the scenari and the decided to make sub-optimal choice.
I took SS early at age 68 even though my parents both croaked at 95.5.
I wanted the money.
We have enjoyed 2 trips to the Iberian Penninsula.
In actuality, there is nothing 'sub-optimal' about that choice. I too wanted to wait until 70, but after running our numbers over and over, turns out that age 67 gave us the most discretionary cash in the bank. You did good...!
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Make it a 'Financial' decision. I suspect that will be ~ FRA +/- a tad.
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