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What good does having more money at 85 do me? I'd rather have it at 62 when I'm young enough to enjoy it.
I've got rental homes, and 950k in the stock market. A bird in the hand...
A cushier room at the nursing home ?
Everyone will have a different answer to that question.
Just like everyone has a different answer to the OP's question.
Life is funny like that...we don't all fit into the same box.
There is one additional reason to consider taking SS early. If the system isn't fixed, benefits may be cut after 2032 to about 80% of what they are currently, as that's all that can be supported from payroll tax proceeds. If that's the case, starting earlier will ensure getting more years at the full benefit rate for your age.
Very interesting, thanks for running these scenarios and taking the time to explain! Two quick questions to clarify....
I'm confused by this single line in the assumptions. Did you really mean "the Delayer starts their draw at $37.9K annually... at age 62?" If not, what was the delayer doing from age 62-70?
Presumably that refers to the "early drawer," since they are both age 62... Correct?
In the scenario the Delayer starts collecting their SS benefits at age 70, which I calculated/estimated to be $37.9K at that age. Between ages 62 and 70 they paid their living expenses from their portfolio and its annual earnings.
I was talking to a friend the other day about Social Security and when to take it. A family member is waiting until 70 to get the maximum benefit but my friend thinks that may not be best. He noted that you are losing 7 1/2 years of income by waiting and it would take a number of years to recoup that money.
His reasoning is this. At 62 1/2 he would get $1,900 a month from SS. At 70 the benefit would be $3,600. If he starts taking it at 62, he would earn a total of $171,000 in those years between retirement and 70 ($1,900 x 12 x 7.5 = $171,000). If he waits to 70, it will take over 8 years to break even and get that $171,000 back ($3,600 - $1,900 = $1,700; $171,000/$1,700 = 100.59 months or 8 years, 4 months).
He feels he should take that money and, assuming he does not need it, invest it to get a better return. Does this make sense? Is he missing something? Jay
I'm wondering how many times will we see this asked again and again. The answer is the same "It depends on when you want to take it"...
Typically balanced portfolio’s have returned 5-6% inflation adjusted over most of history ...big difference in results
True, but not as great as one would think.
I ran the spreadsheets again using a 5% return rather than the initial 4% return, and the age of portfolio equality in Scenario #1 increased only one year. Portfolio balances did increase substantially! Both the Early and Late had final balances approaching $3M.
Scenario #1 didn't reveal anything surprising to me. Portfolio equality was achieved at average life expectancy which appears to be the goal of the SSA actuaries. Late filing results in a greater final portfolio value if you live longer than average.
In Scenario #2 the 5% return increased the age of bankruptcy for the Early Filer from 75 to 77, and age of bankruptcy for the Late filer from 68 to 69, still prior to the planned Filing Age. Using the 5% return and the reduced annual living expense value of $30K increased the age of bankruptcy for the Early Filer from 88 to 94 (increased likelihood of being past death), and the Late Filer was again solvent at every age.
I found Scenario #2 to be a little surprising in that what many would consider to be a 'Not Insignificant' retirement nest egg is still not sufficient to guarantee a long term financially pleasant retirement if not accompanied by careful attention to budgeting.
I estimate increasing the return to 6% would yield similar small gains to all the ages, as happened with the increase from the 4% to 5% return values.
i agree , but the problem is most people do not have enough knowledge and understanding to even make an informed decision . what if i die seems to be all the logic used by most instead of what if i live or my spouse does .
Did your spouse earn her own SS? Then you taking SS at 62 could be an appropriate and clear cut.
What is the age of your spouse if she didn’t earn her own? Is she many years younger? This situation could make things different.
Some people with younger spouses without a work record( and, yes, I am aware of your position on this issue) may decide to work till at least FRA to ensure a higher benefit to a spouse potentially.
Granted, there are not so many cases now as it was in the past when women were expected not to work
Did your spouse earn her own SS? Then you taking SS at 62 could be an appropriate and clear cut.
What is the age of your spouse if she didn’t earn her own? Is she many years younger? This situation could make things different.
Some people with younger spouses without a work record( and, yes, I am aware of your position on this issue) may decide to work till at least FRA to ensure a higher benefit to a spouse potentially.
Granted, there are not so many cases now as it was in the past when women were expected not to work
My wife had her her own record , although a very low one .she did not work for many years in her first marriage by choice...she is two years older then me ...she filed at 62 ...I filed at 65 and she got a spousal adder to hers when I filed
Since my late husband died at 50, I decided to take my SSI at 62.
Now that I just had my 70th birthday I’m kind of sorry........ but glad to be alive and seemingly healthy.
This year I will be required to begin my IRA distributions so I will get a taxable pay increase.
I fully intend to retire and apply for SS at 62. Sure it's less money, but I don't want to work a full time job after that age and I would like to start collecting. We also plan to sell our $$ house and scale down our living expenses.
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