FREE NEWSLETTER
Clearly the answer is maybe. It is a personal decision and I certainly am in no position to advise others or to push one decision or another.
I am more of the “bird in the hand is worth two in the bush” philosophy. We took ours at FRA and invested it for several years and we now have a pile of cash in bonds and monthly income (tax-free) to access when necessary. After over fifteen years reinvesting that income exceeds Connie’s monthly SS benefit.
Unless essential, I would not begin benefits before FRA, but beyond that the picture gets foggy seems to me.
On the other hand, the most common advice seems to be delaying for maximum monthly benefits in later years. The following reasons are often given.
Given the payment amounts are actuarially determined, I don’t buy it. Yes, the monthly benefit will be higher at age 70 – if you reach that age, but for how long? Have more accumulated assets than necessary been used for needed income before age 70?
I see concern about the overall lifetime benefits collected as completely irrelevant.
Given the income levels where SS becomes taxable $25,000 single and $32,000 married, Is delaying SS benefits a practical concern for most retirees?
A higher spousal benefit may be desirable, but at what cost? There are other ways to provide for a survivor like paid up life insurance and accumulated assets that generated investment income.
So, am I alone in the woods again on this one?
These comments are all interesting. My take was that I contributed to it for so long, I did not want to lose out by not living long enough. So I started collecting at age 62 and invested the money. By doing this, I have created an inheritable personal annuity that will be there in my estate no matter how long I live past age 62.
I believe there is no right or wrong answer. The only things I know are that I am not guaranteed that I’ll live to be 82 to “break even” but I do know that I am alive today. So my wife and I both took it SS at FRA and have been investing it into the market ever since.
I know that the past market averages are not guaranteed in the future but it has worked out nicely. I will always continue to believe in the free market
One thing that is worth noting in the debate is simplicity.
I am 40, most of my peers and myself included, don’t have pensions. I will reply on withdrawals from my retirement accounts for the lion share of my retirement income. And I am ready for the challenge that withdrawals brings.
Figure out the absolute earliest we can withdrawal based on certain assumptions and our withdrawal method. It excites me to a degree. It is fun for ME being in spreadsheets…too fun. However, it is not fun for my wife.
And at 40, I have had 3 heart surgeries (all stemming from a birth defect), 2 in late 2022 and 1 back in 2011. So while I hope and plan for a good 40+ years left on this Earth, that may not be reality.
Whats that have to do with when to take social security? Well…enter my wife.My wife is is NOT AT ALL interested in comparing withdrawal strategies, finding hidden risks (either investment or life), weighing the pro’s and cons of glide paths to asset allocations, scheming new options to reduce risk, get more time back, reduce expenses and so on.
My wife would like a number each month. Then pre-pay all the bills she can and do what she pleases with whats left over. She’ll do best when the number is roughly the same every year.
But 401k / IRA investments don’t work entirely like that. Sure, I could get an annuity and likely will heavily evaluate QLAC’s when that time comes in our early 70’s.
But ya know what else is an annuity….social security. That is why I drive home, “hey if I croak, leave social security alone until you are 70” (unless you develop new health concerns between the time I croak and you turn 70).
If she lives past 86 (and I think she will…shes 40 and looks 28) she “wins” the “lifetime benefit social security bet” but it is not about that FOR US.
It is about her having a GUARANTEED, inflation-adjusted, tax-benefited (for now at least) amount of income that she doesn’t have to do anything for or worry about.
Yes, we could start collecting at 62 (and I plan too as the lower income earner…unless I am working for fun still). And yes, we could collect that money and reinvest it and build our own annuity or buy an annuity…but that is more complicated for my wife and less efficient for our investments (for now). When I am 65, I may grow tired of the withdrawal models or feel the need to simplify life for my in the event I pass and can set up more annuities or dividend-paying stocks or bond ladders then.
FOR NOW….just going to delay her social security and relish that she’ll have enough income from that to cover property taxes, utilities and healthcare.