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I’m a long-time lurker/reader and a first-time forum poster. I wanted to share something interesting that I recently discovered with Mike Piper’s very helpful Open Social Security (OSS) tool that seems worth sharing.
As discussed numerous times in Humble Dollar articles and posts, the typical optimal timing for a couple filing for Social Security is to have the higher earning spouse wait until 70 and the lower earning spouse to file at 62. While there are definitely exceptions to this, I found one that I thought was interesting. The OSS tool allows you to use different mortality tables. When using the base mortality table, my wife and I got the “standard” advice of the higher earning spouse waiting until 70 and the lower earning spouse starting at 62. However, when I used the “Non-Smoker Super Preferred” mortality table (the one with the longest lifespans), it recommended that the lower earning spouse wait until age 65 and 3 months with the higher earning spouse still at 70, which surprised me. Intuitively it does seem to make sense that a longer lifespan favors some amount of delay to increase the monthly benefit payout for that extra time.
For us, this is an informative outcome since we are fortunate to be in pretty good health and we were planning to keep making Roth conversions for a few more years. Not starting Social Security right now (my wife and I are turning 62 this year) will give us a bit more income headroom for these conversions.
Hopefully this is informative for anyone who might be using the OSS tool, is comfortable looking at some different mortality scenarios, and is feeling healthy (or lucky!) with their lifespan forecasts.
Mike’s tool is great and has helped numerous folks (as have his relatively short and simple books on Investing, Social Security and others including More than Enough which I am currently reading and finding helpful). There is a ton of research and background data supporting the tool in the design and behind the curtain-he spent a couple of years working on it. There are lots of ways to customize and play around with the results. My wife and I came to a similar conclusion. And, we decided to claim at similar times, with myself at 70 and she at 67 which is in a couple of years.
Like John, this is my first time posting. While I rarely comment anywhere online, the opportunity to ask such an experienced and learned group of individuals has compelled me to come out of hiding momentarily to ask for your thoughts and opinions.
With the passing of the Social Security Fairness Act, my husband will now be eligible (it seems) to receive a spousal benefit based on my earnings, but only if I begin to receive SS myself. Prior to the SSFA passing, we have steadfastly planned to delay my SS until age 70. My husband is 71 and I am 64. We currently draw less than 1% from our investments as travel money, the rest of our income is comprised mainly from my husband’s government pension.
I became aware of the OSS tool through HD and have run multiple scenarios using the mortality tables provided. I used the poorest for my husband as a former smoker and current cancer survivor and the healthiest/longest lifespan for myself. In most cases, OSS recommends that we start taking my benefit and the spouse benefit now, even when I force myself to use a relatively short term for my husband. It changes to recommending waiting until age 70 only when I enter an “end date” for myself of age 90 and above.
If my husband passes before me, my investments, social security and a tiny pension will be the source of my income. When I also run various scenarios through the retirement projection model in Fidelity using those sources, the results show that even under the worst market conditions, I should still have funds at the end of my life, (assuming that the worst market conditions are not coupled with the need for a skilled nursing facility).
We admit to being very tempted to pull the trigger on SS and begin receiving benefits now, but are we missing something? Perhaps I’ll really need the higher monthly payment at 70 if I’m on my own?
I sure could use a crystal ball right about now.
Hi Jan,
The passage of the SSFA appears to upend your planning on when you will claim your SS benefit and also allow a spousal benefit for your husband.
I noted an extended article dated 1/15/2025 on the Kitces website that may have information that could be useful to you.
https://www.kitces.com/blog/social-security-fairness-act-windfall-elimination-provision-government-pension-offset-spousal-benefits-government-pension-wep-gpo-repeal-retirement-latest-industry-news/
My thinking is that as it will take the Social Security Administration months at a minimum to put the SSFA provisions into effect and also the proposed changing the taxation of SS benefits are factors that you may want to consider in your decision to continue delaying your SS claiming or claiming now. You may want to wait to claim until you have better information available.
I do not see in your comment if you are still working. As you are under your FRA your current SS benefit could be limited by your earned income until you reach your FRA which also could be an key item in your claiming decision.
I waited until age 70 to claim my SS benefit based on my earning record but my wife is almost four years younger than me so our spousal situation was very different than yours. For me, waiting to claim during the time period from my FRA to age 70 was top of my mind for those four years. I am happy with my decision to wait to claim but like you I sure could have used a crystal ball.
I hope my thoughts help. Best, Bill
Bill, thank you for the link to the article which provides more background information on SS.
To answer your question if I was still working, I’m not. I retired earlier than expected at 55 due to my husband’s health crisis at that time. I’m fortunate that I was able to have career earnings that provided a comfortable life for myself and my children prior to remarrying and which also will result in a comfortable SS benefit whenever I do elect to begin receiving benefits. I recognize that I am lucky to even be in a position to be wrestling with this issue.
Your comments about it taking time for SSFA to be implemented hit home with me, as did your reminder of potential tax implications, especially as we make incremental Roth IRA conversions. There really is no rush to make a decision (though I am leaning toward waiting until age 70 once again). Sometimes my tendency to over analyze leads to a false sense of urgency when it isn’t beneficial. My brain has settled somewhat. Thank you, Bill, (and others) for taking the time to consider my situation.
Never used the tool, but it says it models for most total spendable dollars over your lifetime. Is that what you are looking for? Or, is the amount of monthly income throughout a combined or a single retirement your concern?
Both-and that is what it accomplishes for my wife and I with myself claiming at 70 and she at 67. And I would emphasize Guaranteed Monthly Income(s) with a COLA and a lower taxation rate than ordinary income.
I don’t see the difference here, Dick. Divide the total spendable dollars by months left to live to get monthly income; they go up or down together.
I guess that’s really the question I’m wrestling with now that a spousal benefit is even possible. The current combined amount of my early/reduced benefit plus his spousal benefit today would be greater than the estimated benefit of mine alone if I delay to age 70. And there is the potential to receive a few hundred thousand dollars during that period which could be invested and eliminate withdrawing any funds from current investments. (We are both savers by nature so the danger of spending is low). Of course, there’s always the option to begin receiving the combined benefit at any point from now until I turn 70.
As I write this and feel my brain cramping with all of the “what ifs,” I’m thinking that it comes down to managing probabilities and that I may just be asking you/HD to have the crystal ball (and confidence) that I lack.
Jan, your outcome under the Fidelity model suggests you don’t need the SS payments now. With that in mind, I’d delay. We never know how bad our situation may be in the future for any number of reasons, and the higher guaranteed income from SS gained by waiting may be more important then.
Some people want to hit their breakeven point, getting back from SS what they paid in. Some want to maximize their $ collected over their lifetimes. Some want to start collecting $ asap even if they could collect more by waiting. Some want the maximum amount coming in whenever they do start collecting.
I don’t care as much about the first few measures. I’m in that last camp, which means I wait until either I need it or turn 70, whichever comes first.
Using the “need or wait” perspective certainly would simplify the decision. Thank you for your opinion, Michael.
Jan, we have a similar perspective as Michael1. Since we don’t need the SS income right now, we would prefer to secure the highest benefit payouts for some cushion if we do beat the mortality table predictions (i.e. a longevity hedge). Best of luck with your decision. A crystal ball would be quite handy!
Joh, I think I’m leaning that way now, too. I appreciate you sharing your thoughts.
*john
The Open Social Security tool says this:
The calculator runs the math for each possible claiming age (or, if you’re married, each possible combination of claiming ages) and reports back, telling you which strategy is expected to provide the most total spendable dollars over your lifetime.
Somebody please explain how that is important as opposed to having the most income each month when you need it the most. “Expected” includes assumptions that you will live to a certain age- what if you don’t?
My only concern was maximum income for me, and maximum survivor benefit for Chris. I never consulted any SS calculator and was not at all interested in my breakeven point. Chris is 3 years younger and took retirement and SS at age 64. My tax prep business only kept me busy for about 3 months/year so it was easy for me to delay SS until 70.
Dick, if the goal is to simply get most income each month (when it may (or may not be needed most), for most couples with lopsided lifetime earners, the higher earner delays til age 70. However, this may be a somewhat simplistic view for some couples that may need the SS benefit earlier to avoid depleting a retirement nest egg below what may be considered comfortable for their circumstances. I also think the PV of benefits may also impact whether age 70 is still the optimal scenario for what I previously described for lopsided earners- our household is in that category.
I just re-ran OSS (last ran it about 2 years ago) because of this discussion, and am finding it’s telling me the optimal claiming age for me is 67 years 10 months (much lower earning spouse will be age 70 then). I’m guessing the large inflation bump in benefits of a few years ago, along with the current higher rate environment is “fine-tuning” my claiming age to be a few years earlier than planned.
I did run the alternative strategy of me claiming at age 70, and it’s calculating a lifetime PV of about $7,500 less than claiming 26 months earlier. This result is having me rethink my original strategy (suggested by OSS) of claiming at age 70. Lot’s to think about, especially tax planning. We were starting to “prune” some IBonds purchased in 2001 to smooth the tax brackets we will be in prior to RMDs kicking in, as well as managing the IRMAA threshold if possible.
Another factor for my household is I did delay SS all the way to age 70, and I pre-deceased my spouse, she would get my much higher benefit. IMO, this is the most significant factor to consider delaying to age 70. Just my 2 cents!
I think if you want that level of service you’d need to hire Mr. Piper, he’s a very accomplished consultant.
For a free online calculator, the number of settings and the output that gives you way more info than here’s the dates, it’s great.
Totally agree. I (single) waited until 70 to get the largest possible base for future cost of living increases. I have no idea when I will reach a “break even” date, and if I die beforehand I will neither know nor care.
What about the tax implications of taking capital gains vs. Social Security payments?
That might matter to people in States like Illinois which doesn’t tax retiree Social Security payments. But does tax capital gains.
Not sure how that affects my position except to take SS instead of using investments.
Which is what we did.
Our reasoning, though, had nothing to do with taxes.
We figured our children can inherit our investments.
As far as I know, Social Security payments cannot be inherited by your children.
I’m 63, single. No matter what inputs I use, it suggest I start collection immediately. Seems odd. And all conventional wisdom and theory suggest waiting until 70.
Did you check out the graph showing the impact of waiting?
Waiting until age 70 gives you a higher monthly benefit for perhaps the last 15 years of your life and possibly higher monthly income for a survivor. Is that most important to you?
How will not having that income for seven years from age 63 to 70 affect your desired lifestyle?
I’m biased, and unconventional, I don’t think waiting until age 70 makes any sense. Use life insurance or accumulated assets to handle survivor income needs, if necessary.
Start SS at FRA and use it or save it if not needed at that time – IMO
Is tax free municipal Bond income better than social security at 70 with a cola? Which is more secure?? Municipalities do fail, I’d have more confidence in the United States than state municipalities.
Yes and no in my opinion. Yes, there is more safety with SS-I Hope. I would not buy individual bonds. I buy bond mutual funds that considerably minimizes the risk. The current tax-free interest rate is from 3.15 to 3.59% for three funds based on duration.
The thing is from FRA to age 70 there is no money from SS whereas I was collecting the age 67 benefits. Then at age 70 while I have lower SS payments, I have the value of the mutual funds plus the monthly interest, the interest being tax free.
The relative total value of the Social Security is highly dependent on how long it is paid, not so with the bonds. What if the person died at 70? Even if they lived to the expectancy of 84, the benefit stops (assuming a single person). At that point the bond fund remains and continues to pay interest and possibly compound. Of course, a survivor could have continued the SS, likely a few more years.
Hey, just my point of view. I’m not selling anything. If I’m wrong, I’ve already lost.
Full retirement age is perhaps the worst time to start collecting, just when the advantage for waiting kicks up to 8% per year.
“Use life insurance or accumulated assets to handle survivor income needs, if necessary.”
Have the survivor rely on accumulated assets? Rather than guaranteed income? Doesn’t sound like the Dick Quinn I’ve been reading for the past few years.
Live off income being generated, take insurance in installments or use some for an annuity, but in our case there are survivor pension benefits plus, of course, SS payments as well.
For my wife and me, we like the idea of treating Social Security as a kind of longevity insurance or hedge. Fortunately, we will be comfortable delaying SS and living off of our other investments without impacting our lifestyle. We plan to maximize the COLA adjusted lifetime benefits of Social Security. For us, it is tough to beat a risk-free 8% return on top of inflation for each year we can delay. Like many of these financial decisions, everyone has to determine what is right for them…this feels right for us.
Given that Mike Piper is a big part of this discussion, I will note that he has disputed describing the 8%-per-year increase in Social Security benefits after Full Retirement Age as an 8% return. Here is a link to his 2020 post on the subject: https://articles.opensocialsecurity.com/8-return/
Key excerpts: “To know the actual return you would get from delaying Social Security, we’d have to know how long you will live (and how long your spouse will live, if you’re married). … (W)e can calculate an expected return based on life expectancies. But that figure turns out to be nowhere near 8% in most cases. For an average unmarried male, the expected return from waiting to file for Social Security works out to about 1.8% above inflation. For an average unmarried female, it’s about 3% above inflation. For a married person, it depends on the difference in ages between the two spouses as well as the difference in primary insurance amounts. (In short, it’s usually significantly higher for the higher earner in the couple and lower for the lower earner in the couple.)”
Well said, John. In my opinion there is no one best age for people to begin drawing their benefits. There are different tradeoffs, depending on which age one begins to draw benefits. It is how one views those tradeoffs which will help them choose the best option, for them.
“For us, it is tough to beat a risk-free 8% return on top of inflation for each year we can delay.”
I had the same philosophy with my pension. I left the job about 10 years before my pension kicked in at latest age of 65. Could have claimed earlier but I had a guaranteed minimum 5 percent per annum so waited until 65 when there were not going to be any further increases.
“For my wife and me, we like the idea of treating Social Security as a kind of longevity insurance or hedge.”
I agree with you that it may not be what everyone feels is right for them, but we see it the same way you do.
Dick: This strikes me as an extremely odd argument, especially coming from somebody who regularly complains that people don’t plan for their financial future. Let me get this right: I should so love the person I’ll be from age 63 to 70 that I should stick it to the person I’ll be from age 70 onward. Is that really the message you want to send?
Jonathan,
I’m not sure which I find more disappointing, your conclusion or the number of up ticks it received.
I would argue exactly the opposite of what you conclude. By delaying you increase the monthly income to be realized several years in the future and accept the risk that goes with that delay.
To do that I suspect most people would consume additional assets from retirement to age 70, they have sufficient excess income so SS before age 70 is not needed for their desired lifestyle or they modify their lifestyle.
I prefer the less actuarial risk, bird in the hand approach with the goal of security beyond age 70 and before if needed.
To that end we both started SS at my full retirement age even though I was still working half time. Connie is four years older and collects half my benefit.
We took the combined gross benefits (there were no deductions at the time as we didn’t need Medicare and I didn’t, at the time, take income tax withholding). That continued for several years and each month the payments purchased municipal bond funds and to this day, sixteen years later, all interest has been reinvested.
Now I am 81 and Connie 85. The bond funds are worth several hundred thousand dollars and generate tax-free income equal to my net (after Medicare, IRMAA premiums and income tax withholding) SS benefit. Either Connie or I or both may need the income stream at some point, but unlike SS, someone will also benefit from the value of the bond funds. Would the age 70 SS monthly benefit been larger than our actual benefit plus interest? I don’t know.
But it seems to me I have not shortchanged the age 70 and beyond self, or Connie or perhaps even our children.
As far as Connie’s security goes if she survives me, she receives a 50% and 75% survivor annuity on my qualified and non-qualified pensions, substantial life insurance and our lifetime accumulated investments. And yes, my FRA COLA adjusted SS benefits.
I don’t think I stuck it to older me or Connie. As we know, there are as many different ok answers to retirement planning as people, but to accept as convectional wisdom delaying SS to age 70 befuddles me as does software that projects highest lifetime accumulated benefits.
Few people have to worry about getting their moneys worth from SS. Eight years age we had collected in benefits an amount equal to every penny I and my employers paid in payroll taxes since 1959.
“I’m not sure which I find more disappointing….” Wow, I feel like I’m age six and talking to my mother. I also appreciate your reference to “convectional wisdom.” If you can’t stand the heat, stay out of the kitchen?
Dick: I’m not going to quibble with all your points, even though they deserve much quibbling. Instead, let me make one simple observation: It seems whatever Dick Quinn did financially in the past was always the right thing to do. Has it ever occurred to you that perhaps a little self-doubt might be in order?
I have not a shred of self-doubt and yes, whatever Dick Quinn did financially in the past was always the right thing to do – for me and Connie under the existing circumstances. It has nothing to do with anyone else.
Even if I had doubt, what good would it do me?
I have met every goal I set for myself regarding work, family and finances. Some through hard work, but much through good fortune and the support of others. Should I be criticized for that?
Now I should question my decisions? Decisions, unlike those of many people on the journey, have already stood the test of time.
I suspect and hope others feel that way about their decisions as well. Each person tries their best to deal with the unknown, with assumptions that may prove true or not
What mystifies me is why other readers occasionally resent my confidence or care what I do.
I’m not giving advice, I’m explaining my position, my actions and sometimes simply challenging – I guess conventional wisdom.
Seems to me that is quite common in retirement planning. Look at the debate over withdrawal strategies.
People upend their lives and relocate to an entirely different environment. I would never do that, but those who do have their valid reasons believing it the right thing to do. So be it.
Who makes decisions in their life they don’t firmly believe is the right thing to do?
In many prior posts, you have mentioned how HD readers are likely different from their non-HD reading cohorts. That HD readers probably have greater knowledge of financial concepts and may even have larger-than-average financial assets.
I think what may set you apart from some of the other HD writers comes down to these two statements:
“I have not a shred of self-doubt” and “I have met every goal I set for myself regarding work, family and finances.”
I, for one, would never make either of those two statements. Even if I was wildly successful beyond my greatest dreams and expectations, I would still be filled with self-doubt. And I can’t imagine ever saying I had met every goal I set for myself. That would be impossible. Too many goals, too little time.
I suspect your immense personal self-confidence and obvious financial success influence your style of writing. It’s possible it comes off as ‘preachy’ and perhaps even braggart.
Well, that’s why we are two different people, Kristine. I don’t have self-doubt, it’s a waste of time to me. My career required me to create major change, to stick my neck out with long-term commitments and to deliver results.
You have written you were happy to work alone, I gave talks to groups of hundreds of people around the country.
There was no room for self doubt and very little for error.
And, as I suspect you know, I do not focus on details, but on the end result, the overall long-term goal. As long as one gets there, do the details how matter?
When I was 18 starting my first job I set several goals – I guess dreams at that point. They involved family related, financial and career. It took me longer than I had hoped, but I did achieve them all. I also eventually achieved a few far less important material goals.
If I talk about any of that in the context of HD issues, I’m called a braggart.
As far a preaching goes, not trying to provide advice, just presenting my opinion and trying to clarify if necessary. I also ask questions in an effort to understand other reasoning or points of view.
I attempt to write honestly and directly which readers are welcome to disagree with, and with complete disclosure.
As far as this topic goes, isn’t the actual goal to provide fully adequate income throughout any length retirement for the retiree and another person as necessary? Does how really matter?
“It seems whatever Dick Quinn did financially in the past was always the right thing to do.”
Thank you for saying what I’ve been thinking for awhile now.
Don’t you feel that way about your decisions?
Wasn’t moving to Az, investing heavily in your dogs the right thing to do? I don’t think you would have done those things if you didn’t believe that, or retire at 55 for that matter. All the right thing to do – for you.
I wouldn’t do any of those, but what I would do doesn’t make you wrong.
Yes those were my decisions. But if you think for a second that each and every one of them didn’t fill me with self-doubt (and still does), you would be crazy.
As I mentioned in my earlier reply to your comment, you clearly possess a level of self-confidence I’m not familiar with.
Welcome to the club Kristine. I’ve made tons of decisions that I was unsure about. I expect I’ll make more. I’ve also made some I was sure about that didn’t look so great later. This is all true of most of us I suspect.
Thanks Michael.
Yes, I suspect having self-doubt is more common than being so self-confident you have no doubt at all about any decision you’ve ever made.
Jonathan did you mean humbleness?
John, we received a similar result as you several years ago. My spouse is 2 years older and lower earner, and claimed just before age 65. I’m waiting til age 70, at which time my spouse will, get about a 50% bump from the spousal benefit over what is currently being paid. If I recall, if the lower earning spouse claims their benefit early, the spousal benefit is reduced at such time the higher earning spots starts their benefits. I thought this was generally why the lower earning spouse would claim around age 65|66 in the OSS program.
Hi Bill. Thanks for sharing your plan. There is definitely a nice bump in the benefit that you get by waiting. I believe it is about 8% each year on top of inflation until you reach 70.
Edit: I removed an earlier reference to “compounding” on Social Security benefit payouts. The 8% annual increase is applied to your original benefit amount, so it is not compounded. See James McGlynn’s excellent article on delaying Social Security for more details at:
https://humbledollar.com/2024/04/dont-delay-2/
Congratulations on the first post John. We got similar results when we checked the tool. Wife started collecting SS when she retired at 65 and I’ll start at 70.
Thanks Don. It is good for me to hear that others have had similar results since I had heard so much on claiming at 62 and 70 for couples. It is also nice to be able to contribute to the conversation on this forum after getting so much from it as well as the articles. Jonathan has created a really interesting and engaging financial community here.
Great input. Thank you for posting.
Thanks Dan. Glad it was worth reading!
John, we did something similar, following the number crunching and advice at Maximize My Social Security, Laurence Kotlikoff’s excellent site. I was the higher earner (and 4 1/2 years older). I started SS at 70 and my wife at 66 years 4 months, her full retirement age, when she also received spousal benefits.
I don’t think there was a way to factor in different lifespan expectancies, so it’s noteworthy that we weren’t advised to start my wife at 62 even without adjusting those.
Andrew, thanks for sharing your situation. I’m glad to hear of someone else who went down a non-standard path but still basing it on some sort of optimization calculation. I was slightly surprised when I saw the OSS recommendation change when I used a different mortality table.
Some of us that are younger can’t do the file and suspend like you did, Andrew. We were going to do the same, but that loophole was closed for our age group. Chris
Hi, Chris. We didn’t do the file and suspend. We just did straightforward filing for each of us at the ages I mentioned.
Gotcha. Thanks, Andrew. C