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I make no recommendations, no suggestions, no nothing, but ask what people conclude for themselves. Does the following make any sense under any scenario?
I used the SSA Quick Calculator and the SSA life expectancy table
Worker with Social Security average earnings of $75,000
Starting worker only benefits at age 70: $2578 per month
Starting worker only benefits at age 66: $1923 per month
Monthly additional benefit starting at age 70: $665
Accumulated benefits not claimed from age 66 to 70: $91,824
Estimated value of age 66 monthly benefit if invested monthly to age 70 at 7% per year: $108,751.03
Estimated monthly income from accumulated assets using 4% rule: $362.50
Life expectancy at age 70: Male 13.69 years. Female 16.00 years
This is essentially my logic but we invested both of our total monthly benefits and Connie is 4.5 years older than me.
Our investments from this approach (investing both of our benefits for about four years) – my benefit was the maximum at FRA at the time – now generate about $1,600 in tax-free monthly income from municipal bond funds. Of course, not as secure as Social Security.
FYI
Only about 10% start SS at age 70, 27% at 62 and nearly 25% at age 66. I’m guessing those are not planned strategies, but necessity.
RDQ…
The magic word is IF!
IF you claim early and INVEST…
Years ago, in the late 70’s a guy by the name of A L Williams devised a scheme to “beat the insurance industry at their crooked game!” “How”, you might ask? He developed the strategy of “Buying Term, and Investing Difference.”
I am NOT suggesting your motives for your recommendation for consideration of Claiming social security are anything like his regarding life insurance, but I BELIEVE the outcome will be similar!
Williams’ strategy involved advising and assisting people in surrendering WHOLE LIFE or permanent life policies, stripping out the cash values to invest in mutual funds, and buying Term Insurance instead. Disregarding the facts that Williams and all of his acolytes(he created an MLM Organization with which he caused untold damage to American life insurance policy owners) sold a terrible, low rated term product, and then recommended mutual funds with the highest fees in the market, at the time. Williams became a multi-millionaire, and as you might suspect, his MLM acolytes usually made very little and quit after a short period of “going for it!”
Now…the problem with A L Williams’ strategy was simply that many people surrendered their permanent insurance but they did not “invest the difference.” They spent it. And then their subpar Term Policies would lapse and they were left with nothing!
Claiming early with Social Security will never “leave you with nothing,” but I am afraid many people will not save and invest their benefit dollars, rather they will simply spend them. Not HD readers, of course, but many others.
Your calculations aside, it isn’t that it’s not possible, it is however far more risky. 8% guaranteed, with COLA, is hard to beat in the market. But it is also likely that reasons will crop up that cause one to “need the money this month, but I will get back on plan next month.”
After all, life happens.
As others have and will say, it’s a personal decision! I waited until 70, because I was still working, and for my wife and me, it was the best decision. If a person needs the money to live on at 62, 67, or anywhere in between, file!
We are receiving $73,000 annually in benefits in 2024. We will have recovered 100% of our contributions in 6-7 years. God willing, we will be here to enjoy our hard earned benefits!
Seems to me just about everything is based on ifs, especially financial related. I recovered all i paid in taxes in less than six years starting at FRA, but that is never a goal in my opinion. They are taxes, not investments and unrelated to benefits earned. I do not see SS as an asset or accumulating anything, no different than my pension which does not have lump sum option.
On the other hand my wife and i have SS income, we have several hundred thousand in investments from our strategy plus income generated from those investments.
For that we gave up a higher monthly benefit at age 70 which may or may not have been realized and for how long unknown.
Not trying to sell my strategy to anyone . Too many variables and personal priorities.