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The Magic Number

Larry Sayler

WHEN SHOULD YOU start drawing Social Security? If folks want to maximize their lifetime benefit, I think the answer is fairly straightforward.

Maximizing lifetime Social Security income isn’t always the goal, of course. Some people need Social Security to meet basic needs. These people usually claim benefits as soon as they reach age 62, the earliest possible age.

Others view Social Security as longevity insurance. They want as much monthly income as possible in the event they or their spouse live a long time. These people typically wait until 70, the latest possible age, to start Social Security.

But for many people, the goal is to maximize the amount they’re likely to receive during their lifetime. Financial nerds often toss around terms like “breakeven” or “cross-over.” More sophisticated analysts consider present values and appropriate discount rates. I like simple. Want to maximize lifetime income? I believe the decision rule is fairly simple.

  • If I am likely to die early in retirement, I should start Social Security as soon as possible. If I know I am going to die at age 65 and I don’t have a spouse who will receive survivor benefits, I had better start Social Security at 62. It makes no sense to wait.
  • On the other hand, if I am going to live a long time—perhaps to age 90 or even 100—I want the largest monthly check possible for all those years. I achieve that by waiting until 70 to start Social Security.
  • If I have no reason to think I will either die early or live a very long life, it makes sense to start Social Security sometime between age 62 and 70. One might choose age 66, the midpoint between 62 and 70. Others might choose their Social Security full retirement age. For those born between 1943 and 1954, full retirement age is 66. For those born between 1955 and 1959, it’s 66 and some months. For those born in 1960 or later, full retirement age is 67.

When I considered Social Security, my goal was to maximize my likely lifetime income. I might die early. Although I have no significant health issues, I am overweight and, unlike Dennis Friedman, I do not exercise regularly.

On the other hand, I might live a very long time. I do have some good genes. My grandmother lived to nearly 112 and my mother is still doing well at 95. I have never smoked and I drink only occasionally.

My decision? My full retirement age was 66. I also liked the idea that 66 was the midpoint between 62 and 70. Although I had retired a few years earlier, I chose to start drawing Social Security at 66.

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