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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.
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.
our planning age is 95 for both of us given our family histories. I’ve read that the probability of both of us living to that age is vanishingly small.
And spouse is 8 years younger, so if I wait until 70 we can decide when she should start hers.
OTOH, I did the math and concluded that if I claim earlier at 65 or so and we both end up reaching planning age 95, I only miss out on around $250k or less had I waited until 70.
Logic tells me that if $250k is the difference between a successful retirement and destitution, we have bigger financial issues. So currently aiming for 65 in about two more years.
For me the benefit of waiting till 70 to start collecting ss is to have the maximum monthly payment possible to cover the potential cost of long term care if I do need it. I have pension and I also wait till I get the max payment as well. Meanwhile I am already retired and don’t need neither of these incomes.
We’re in a position to both wait to 70 to draw SS. My parents both lived to 95 and her mom is still alive (and in reasonably good health) at 98. As far as an inflation adjusted annuity, SS can’t be beat.
What I rarely see mentioned is how to calculate the financial impact faced by those of us in-between. The late-stage boomers who will collect 100% if claiming early, before the projected 23% cut hits, but will hit the 2034 shortfall before their FRA-70.
Although some swear cuts won’t happen, SSA already stated they would as things stand now. So it seems prudent to at least do the math to prepare, if needed.
Say someone delays to FRA-70 for a higher SS check. Will that higher amount be erased by the 23% loss that person will experience on every SS check from the getgo, along w/several lost SS years they could have had at 100%?
I always read that waiting assures more money per check. But not so sure that’s true for those of us in the above group.
Anyone know how to calculate this? Does Open SS address this?