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Long-time Lurker who read Johnathan’s WSJ columns for decades and had several delightful conversation with him.
I thought I would share “Yet-Another Social Security Spreadsheet Analysis on what Age to Start taking Benefits” as I would appreciate (candid) commentary on how I can improve this from the financial wizards at Humble Dollar.
Thanks in advance for any suggestions.
Before asking when to claim Social Security, we should first ask how retirement will be funded during each phase of retirement.
What’s the plan for covering living expenses from early retirement to FRA, from FRA to age 70 if benefits are delayed, and then after age 70? Only after that cash-flow plan is clear does the claiming decision really make sense. For retirees with substantial assets, legacy goals also become part of the equation.
I know this is a much more complicated problem than comparing breakeven ages or lifetime benefits, but is this the kind of retirement-income planning tool you would consider building?
Your first mistake is relying on a spreadsheet 😎
My real question is, what is the goal of the calculation. Please don’t say it is to maximize lifetime benefit payments because that is irrelevant IMHO.
The goal is to maximize income when you need it most and that should consider what percentage of total income SS will represent if dealing with inflation is a factor in the decision.
Taking SS before FRA should be a necessity only decision and I suspect for most people it is.
Delaying to age 70 is still debatable in my opinion, but if the goal is higher survivor benefits the age difference between the parties is a factor.
I don’t know which option others should choose; there are many individual factors which must be taken into account. I think what you wrote is sensible, and it worked out well for you and your wife. By the way, I hope she is doing well with her medical issues. Your statement: “The goal is to maximize income when you need it most….” I agree this makes sense. I knew what my financial status and income needs were when I reached FRA, but was less certain what they might be 20 years in the future. So it was not knowable when I would “need it most”, therefore I waited until 70. I risked collecting less cumulatively if I should pass at a younger age. On the other hand, there was a risk that one or both of us could live much longer than average and our portfolio might shrink, providing less annual income in real dollars (i.e., inflation adjusted dollars) in our 90s. In this case, ironically, our SSA benefits might provide a larger proportion of our income then than it does today. Cheers.
Thank you for asking about Connie. Things are going as well as may be expected, we have learned to take everything one day at a time. Very thankful for Medicare and Medigap coverage even though expensive it’s insignificant compared to the cost of care.
Your SS logic makes sense, there is a risk and gamble no matter what choice a person makes.
i’m surprised i don’t read in posts that life insurance is part of the equation for survivor security. That seems very efficient for one part of the strategy.
Thats a good point. We don’t need it ourselves, but I am aware of others for whom it could be useful. As a retired physician, and unfortunately now as a consumer of healthcare myself, I second your opinion about Medicare and supplemental policy.