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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.
More than any other financial issue, this one is a function of an individual’s personal situation. There is no right answer for all but many different right answers for all. All the formulae in the world, cannot replace the particular wants and needs of an individual….and most of that is purely personal judgment.
The one thing I know 100% about social security is the only time I/we’ll know when is the best time to start taking it is when both my wife and I are dead and we count backwards. Of course, when we are both dead nobody will care. We decided for her to take it when she retired 8 months before FRA and I’m planning on starting when I hit 70. Still 3 1/2 years away for me so that is always subject to change.
I think there are tradeoffs no matter which claiming strategy is chosen. Dick, you have previously posted on your personal blog some reasonable strategies to avert the looming funding shortfall for Social Security and I’d like to read what others on this site think about that.
My first step would be to get rid of the payroll cap entirely.
I totally disagree with Dick’s idea of denying COLA increases to some recipients. Of course everyone should get cost of living increases!
Getting rid of payroll cap is fine as long as the eventual benefit considers those earnings even at a lower accumulation rate formula, but that change alone does not make SS solvent.
My view is that people who begin SS with the maximum benefit – people like me – and others on HD had ample time and resources to prepare for and provide their own way to deal with inflation and likely are not living on SS to a major extent – or shouldn’t be.
Providing a COLA to those who don’t need it is a large compounding expense to the trust. That extra benefit should go to those who need it. A 3% COLA costs about $43.1 billion.
You have no idea whether people getting higher than average SS payouts had life experiences that make it an important part of their retirement income, especially in a country with an inadequate social safety net. If you feel you are getting too high a SS payment you can always pay extra tax voluntarily.
With people living longer after FRA those COLAs are going to be significant even if we don’t have another bout of inflation.
A couple with a spousal benefit at the maximum today at FRA can receive $58,752 a year according to SSA calculator. Far higher if they delay.
That means one perhaps both had darn good working incomes over many years. Of course there will be exceptions during life, but dealing with inflation during retirement at this income level should be feasible for all but the few exceptions.
As I recall even the 4% rule builds in inflation adjustments.
I retired knowing there was no COLA on my pension and I planned accordingly which I explained more times than anyone wanted to hear.
And note I said no COLA every year which does not prevent every three or five years possibly.
Making SS solvent is not hard. Several minor changes combined could have done the job, but every month delay makes it more difficult now. The trustee report each year for over ten years has urged Congress to act sooner than later and it’s been ignored every year. Now the issue is caught up in national politics again.
My favorite solution is modest increase 1.5% or so in the payroll tax skewed toward employers. No more 50/50 but make a larger employer percentage essentially a form of deferred compensation. Also, make the COLA means tested – no one who begins Social Security with the maximum benefit at FRA should receive a COLA every year. Section 125 cafeteria plans should be subject to payroll tax.
The tax percentage and wages subject to the tax should automatically be adjusted every year based on the actuaries calculations that keep the program solvent. No more political nonsense.
I think most of us would agree the time to “fix” the problem is now. I particularly like your proposal to annually adjust the taxes to keep the program financially sound.
I don’t agree with the idea of limiting COLA for some, but I sure agree with everything else. I especially agree with yearly actuarial adjustments. Who knows, maybe sometime in the future taxes could even be reduced.
I enjoying reading the “math” everyone does but don’t want to do it! I retired at 62 and took one of my defined benefit pensions 3 years early after doing the “math” and realizing waiting 3 years wouldn’t be significant! After that I just knew I wanted to wait until 70 because I’m single and we seem to live a long time in my family.
I managed to do that (now 71) and seems to be worth it to me. Getting to 70 was a bit of a stretch at times. I tapped my taxable IRA to supplement my income, claimed 50% of my ex-husband’s SS at my FRA, had to buy my own healthcare (ouch!), I worked a part time job for about a year and half, and lastly my ex-husband died young and I received survivor benefits at 67.
So many ways to skin the cat and not everything is within our control. Make your best guess and move on!
Why do you care about collecting the average amount? I care about the size of the payment, not how many I’ll get.
Amen!
We’re all somewhat alone in the woods on this one, because the decision depends on each personal situation.
What is your marital status and partner’s SS entitlement?
What is your current financial situation?
What are your financial goals/plans?
How long do you and your spouse reasonably expect to live vs the SSA actuarial tables for your age group?
What are your financial goals/plans for the funds?
etc…
For any given situation there are probably a number of reasonably good options, and possibly some bad ones. The key is to avoid the obviously bad options and focus on the good ones without getting overly anxious about not picking the “best” option. Remember, the hardest decisions often involve choosing between two reasonably good choices.
I plan on waiting until I’m 70 until taking SS. My younger wife will take her SS at her FRA of 67. I’ve built my own models and consulted with Mike Piper (Social Security Made Simple) and his model. You also should understand the assumptions for longevity in his model. The penalty prior to FRA is substantial (30%). Waiting from FRA until 70 is more of an investment decision. Taxes play a big role in my decision. The period from age 62 to 70, I have used to convert a large amount from Traditional IRA to Roth. If I took SS, that would push up my taxable income. This would lower conversions and cause more tax issues when we take required distributions from our IRAs. You should also remember that if things change in your life and you need the money, you can file for SS that day and start the money coming your way, but if you wait, you are also increasing the survivor annuity for your spouse.
I have to admit that I’m fascinated by the depth of Dick’s planning. He has generated significant tax free income. I don’t know of anyone who has taken this approach. I took a different path and have no regrets.
The strategy I most disagree with is the break-even one. Although my friend Don always made more money than me, he forgot to save any of it. He took his SS early, spent every nickel of it, and continued working to age 75. He confidently explained to me about his break-even point. Now well past the age of breaking even his only source of income is his reduced SS benefit. His is not an unusual result of only looking at “break-even”.
The break-even mentality is a red herring, as you rightly point out, with a good example. One wants to maximize available income for one’s later years, and there are a variety of routes to achieve that goal.
I retired at 60 with a generous COLA pension and my wife retired at 62. We both claimed SS at 62. We were fairly high earners, so we get around 56K total in SS per year. We are very fortunate to have saved a fair amount in IRA’s too and barring unforeseen disasters have more income than we need in retirement. I am pretty healthy, but my wife has a health issue. However, we plan on living into our 80’s. With that rough explanation of our situation, I will now offer my thoughts for claiming SS early as it pertains to our specific circumstances. We live in a state that does not tax SS. The savings at a state level is around 5.75 percent per year of our total SS. We also have the offset of the Federal tax savings of 15 percent of our total SS per year. I created a small spreadsheet and with those two factors included it looks like we made the right choice for our circumstances by claiming early.
For an example, let’s say you have 50k per year in SS that nets to 45k with the tax advantages I mentioned above. If you took 50k out of an IRA and applied taxes your net would be around 41k. In order to get you back to the 45k net of the SS figures you would need to take around 52k out of an IRA each year to net 45k. When I ran the numbers with the tax savings mentioned above, I found that we had about a 7 percent advantage each year from tax savings and even more if you use the last scenario where you try to match the net of just the SS dollars. Anyhow, it pushed our break evens out by 4 to 7 years beyond the normal break-even ages. That put us in our early to mid 80’s before we lose the advantage of claiming early. Another factor in claiming early is that we wish to leave a legacy to our kids and by claiming early it will leave more funds available to be passed on to them. By not having to take any funds out of our IRA’s for several years that principal has grown and if left alone for more years will greatly offset by several times any advantage of claiming SS at FRA or at 70.
I understand that if you do not have the advantage of a COLA pension or other guaranteed income it may be best to wait, but in our circumstances it seems we did the right thing.
I read a fair amount of articles about retirement strategies, but I have not found any articles that factor in taxes into SS claiming strategies and especially scenarios in which states do not tax SS. By doing so you can bump out your break-even ages it seems. Am I looking at this from an invalid perspective?
Those pulling from taxable accounts won’t be paying as much tax as from traditional retirement accounts.
Doug, thank you very much for this perspective. I too have a COLA pension and am about your age and like your way of analysis. But how does a COLA pension support your plan? Without it, you would be pulling even more from IRAs before age 70, which still supports your analysis. With a COLA pension one could argue to wait until 70 because of the need to pull less from savings. The tax advantage you cite is important, but won’t that apply as well if you waited until 70 to claim? I think the game changer in your analysis is your planning for demise in your 80s, which may be a reasonable plan understanding that if you are off by 5-15 years you beat the odds and will be paying for it. Maybe a good bet to have lost:). Thanks again.
With the COLA pension and our SS income we end up having about 20 percent more than we need for day-to-day expenses and we usually use that 20 percent for part of our travel budget (40 to 50k per year, we are in the ‘Go-Go’ years). We supplement travel if needed from our IRA’s. We took the ‘a bird in the hand is better…’ approach with SS. The pension acts as our guaranteed income and with the desire to maximize our IRA’s and stock holdings to leave a legacy for our kids we are comfortable with where we are and see the SS break even as not really favoring our circumstances. The dollars we left in our IRA’s instead of pulling out prior to SS claims is compounding nicely and will offset the break even by many times the amount we would receive in SS benefits if we had waited until even 70.
There’s a large difference between my wife’s benefit (much smaller) and mine so, after considering Mike Piper’s advice and our own finances, we took hers early at 63 and are deferring mine till probably 70. Seems like the best of both worlds. We immediately start collecting the “first to die” annuity and defer the much larger survivor annuity. Provides us with extra income in our 60’s and minimal, if any, draw from our portfolio allowing it to continue to grow while still preserving the much larger SS benefit for later and the surviving spouse. It’s somewhat of a mortality hedge against one of us dying early and losing the lower benefit If we had both deferred, I think the breakeven was both of us living well into our mid 80’s. We also have pensions which, admittedly, makes these decisions much easier.
When to take SS is a certainly a personal decision as you observe. Clearly no “one size fits all”. I am in the fortunate position of not needing SS and will delay until age 70. Before then, I hope to minimize future taxes by drawing down and living off of tax-deferred savings. Plus, at age 70.5, I can begin to offset SS income with qualified charitable distributions from an inherited IRA.
I suggest a spreadsheet showing the payments for each year. One column starting at FRA and the the second column starting at 70. See where the totals meet. My wife and I started at FRA.
I used a spreadsheet to determine breakeven point for FRA vs 70. It was around 82 years. Since no male in my family had lived past 73, I took it at FRA, age 66.
I have a no COLA pension, and our combined SS and the pension have been more than adequate for our expenses. We have only used savings for major capital expenses like cars (2) and a kitchen remodel. Despite that, savings have more than doubled since retirement.
Now 80 and wife 81, we have no regrets.
On this topic, I can’t get enough. Thank you Dick. There’s plenty of info out there saying wait until 70 without much questioning of other options or consideration for personal situations. I don’t always agree with the reasoning of all that I read , but it always prompts me to think and make my own conclusion. Dick has been one of the few who has laid his personal situation out there and prompted discussion and maybe requestioning of made up minds. In particular he has hindsight to pass along that is enormously helpful. Please keep beating that horse Dick, because it makes me rethink it and make sure nothing has changed to make another option look better. When I start feeling sorry for the horse I’ll just move on to another great article on HD and be glad that others have the benefit of reading it, or not.
A breath of fresh air. I’m looking for a new topic with zero controversy and 100% agreement. It may take me awhile.
Our investment plan since retiring in 2020 at 62 yo has been to delay claiming SS until 70 and living off our portfolio. I see this as purchasing two lifetime inflation adjusted annuities, with my check being larger, a 100% survivor benefit. My thought at the time, and still is, is to wait to claim unless our portfolio drops to a certain level (at which time my wife would claim her smaller benefit). I am comfortable this plan will provide us with more than enough income to supplement our SS checks. Even with the 2022 drop in the stock and bond market we did not approach that line, and our portfolio has the same value now as when we retired. We will continue along this path unless I discover a rock solid theory of why this is a mistake.
So why not claim SS now and let the portfolio grow to be even more bullet proof. What happens if you reduce your withdrawals from the portfolio equal to the amount of SS you can get now? Even if your portfolio drops a bit due to a really bad market, how does that impact the income you tol live on? Finally, any thoughts on leaving a legacy? Yes, you get a 30% larger check at 70, but it would mean less money to pass on. SS is shut off once you pass but, you can leave a legacy with retirement account balance. Something to ponder? There is no right or wrong answer, it is just another way to look at the options.
Mike,
Thanks for your input.
Right now we are living off of inherited IRAs which I have to take at least my parents RMDs (we are actually taking more). For this year we are living almost exclusively off of my mother’s Roth in order to maximize my wife’s Roth conversions.
The following two to three years will be living off of a taxable intermediate term bond fund that is money inherited from the sale of my parent’s house. Due to ‘22 being the worst bond year in history we are barely above water overall, but will have significant realized capital losses to deduct.
By using primarily my parent’s assets I’m not significantly touching our actual IRAs. If we empty my parent’s assets at that point will consider claiming my wife’s SS in order to minimize withdrawals from our IRAs.
My goal is to totally convert my wife’s traditional IRA to a Roth to simplify my finances by only having to take RMDs from my larger traditional IRA.
Finally I am not concerned with leaving a legacy for my children, I am primarily concerned with having sufficient income for my wife whom the odds are good she will live more than 100 years (her mother is perfectly healthy living with us nearing her 103rd birthday this Christmas). Her aunt lived to 103 1/2.
That’s the beauty of the question right, SS claiming strategies are unique to the individual and it is never black or white. If i had an inherited IRA that i could draw from, then waiting might certainly make sense. In my case we have nothing inherited and I do want to leave a bit.for kids/grandkids if blessed with those. Thanks for responding to my comment.
One more finally:
Regarding my children. We helped pay for their college education and they and their spouses make > 100K/year which is more than my wife and I made combined except for a few late working years.
They also each received and were greatly appreciative of receiving 50K each from my inheritance the year my parents died. My son and his wife were able to use as a down payment for a house in 2020 with a 3.4% mortgage, and my daughter pay off all post divorce debt and college loans. As a result both have been able to use their additional income for their own retirement accounts (in my single daughter’s case maxing out all possible amounts).
I think they should be fine!
I brought this up a while back and the responses pointed to me being everything from nuts to naive and that I should consider delaying taking social security. Some pointed me to Mike Piper’s calculator that gave you scenarios showing having the lower earning spouse claiming at 62 while the highest earner claiming at 70. That does give the largest total social security payout, however I’m not convinced that on its own is the right strategy. I have run this through several scenarios and it really depends on several factors.
– your legacy goals
-your non taxable retirement balance
-tax planning and optimization
-when you plan to stop working
-your retirement spending goals.
Me thinks, taking the SS money earlier to avoid touching what is already a pretty substantial retirement account balance and allowing that to continue growing is the best strategy for me. I can spend the SS dollars early, to travel, see the world and minimize my retirement accounts drawdown is the optimal plan. I can delay until seventy, but am I supposed to either pinch pennies until then or substantially drawdown my 401k. Then if I die at 71-75, I’ve lost all of those SS income years? If I live to 95, then the 401ks plus the reduced SS is still enough, actuallymy RMDs would be crazy. I don’t want the biggest check at 75, I need it at 62 so I can do my thing with the Missy enjoying our go go years and still leave the 401k to do it’s thing and set us up for the later.years. I took into account sequence of return risk and the increased SS cola, after running the numbers, waiting to aged seventy doesn’t make our family better off.
Well and clearly explained Mike!
Makes sense to me. Every situation is unique.
Great to see a fresh topic raised from Quinn 🙂 In addition to your list and more income with a COLA (added in the comments..) I’d add both more relative guaranteed income (SS is a great annuity with a COLA-hard to find..) for an income floor and that a delay strategy can allow more time for Roth conversions in a coordinated retirement plan.
I’m 60 and plan to wait 10 years. I think that will allow me to do more Roth conversions at a low tax bracket, though I probably have to watch out for IRMAA.
It was easy for both of us to wait until 70 to claim because we didn’t retire until we were 70 and 71. We were also fortunate to have been able to take advantage of file and suspend just before it was eliminated. Our combined SS benefits will exceed $100K next year after the projected 2.5% increase.
Our 2024 benefits are 25.46% greater than they were when we started collecting benefits in 2019. Because our FRAs were 66, our initial benefits were increased by 32% because we delayed claiming for 4 years. The compounding effect of the annual benefit increases on our larger benefit amounts has resulted in our 2024 benefits being 65.6% greater than they would have been if we had claimed at our FRAs. While others obviously argue that claiming earlier and investing SS benefits is a better strategy, we have never second-guessed our decision.
I think the fact you both didn’t actually retire until age 70 is a key factor for you. That decision itself is a good topic for discussion.
You have more income and actuarially at least, less time to enjoy it. I hope you beat the odds by many years of retirement.
Thanks. We wouldn’t have lived any differently if we had claimed any earlier so for us the only issue was whether to claim at 70 or to claim earlier and invest our SS benefits like the two of you did. I think good arguments can be made for either of our choices. We are conservative investors and decided that the additional COLA SS benefits would give us a greater sense of security.
I don’t buy your reasoning, Dick — but I also think you overlook one rock-solid reason for you to have claimed earlier than age 70. In fact, after reading your justification for your strategy again and again, I’m amazed you’ve never mentioned it! What’s the reason to claim earlier than 70? Connie is four years older than you — and she couldn’t get spousal benefits until you filed. If you waited until 70, Connie would have been 74, and would have missed out on many years of spousal benefits.
I think all this nit picking is missing the forest for the trees.
Dick’s decisions have resulted in two things:
1) He appears to have more yearly income than he and Connie spend (I believe from reading other articles they are still able to invest some of their yearly income).
2) Their children/grandchildren are going to inherit a boatload of money when they pass.
Does anything else really matter?
Excellent job Dick!
Jonathan, I think you overlooked the fact that the file and suspend option was still available for Dick and Connie when Dick reached his FRA (66). Because Connie is older than Dick, she would have started receiving spousal benefits at 70 if Dick had exercised the file and suspend option instead of claiming when he reached his FRA. If Dick had filed and suspended at age 66 and waited until 70 to start receiving benefits, the two of them would both have received SS benefits that would have initially been 32% larger and that difference would have increased with each years SS COLA.
Good catch! By doing file and suspend, the spousal benefit could have been unlocked at his FRA, and he then would still have had the option to delay filing until 70.
Could that be what this is about? Maybe Richard has been second-guessing his own claiming decision, and now realizes that the older one gets, the less prudent earlier filing looks. And at some point, what you were convinced was the “right decision” becomes…well, the less-than-optimal choice. Hmm…
Actually the older we get the better our choice looks. We have several hundred thousand more to leave to our children, tax free income and still our SS benefits are more than we need. During the first ten years of retirement of so the SS benefits were our travel money.
No surprise there Dick. That’s what my financial calculator told me too. The decision of when to claim cannot be made in a vacuum. You must take into account all the factors that are going to be impacting you. Those factors will guide you on the decision that’s right for you. For you and me its taking that SS cash earlier. Good discussion Dick.
The better your choice looks…compared to what? Spending nothing? Some comparison. So, if I claim SS early, the longer I live, the better that choice will look. Got it.
I thought you said you invested your social security payments into tax-free bonds, now you say you used the money for travel?
It’s the miracle of compounding! 🙂 You can both spend it, and invest it at the same time.
Both. It was fully invested for several years and then designated for travel. I was still working and not retired when we starting SS.
But elsewhere in this thread you say: “it was all invested in municipal bond funds, but now after 15 years there is a pool of investments generating $1600 a month in tax free income and even if Connie needs to rely on that income someday, there will still be assets to leave to our children.” As in the original post, you change the facts or your opinion when convenient for your position.
Facts are we have accumulated six figure municipal bonds paying about $1,600 a month in interest as of last month. The investments when they were being made came from of SS benefits.
When we began SS I was still working and until I retired all the SS was invested, then when I retired some was still invested, some used for travel, then we stopped investing and used the SS for travel and continued reinvesting all interest and still do so. The monthly interest amount is still growing as is the fund balance.
Today the SS payments are deposited in a bank account we label travel, but since we haven’t done that much travel in a couple of years the balance just grows. If travel ends up off the table, we may invest the SS payments once again.
As you no doubt realize, because of my other non-conventional retirement thoughts about income replacement and that I worked until nearly 67, we don’t rely on SS for living expenses.
You first say that delaying SS until 70 may be the right decision, then you list a number of good reasons to wait, but then you declare that you don’t “buy it,” and rehearse your argument (made many times on the site) that your way is really the best, resulting in more money anyway one looks at it. But, to quote you, “I don’t buy it.” Your first answer is the correct one: the decision has to fit the personal situation of each individual/couple. Moreover, one can play with the variables to show how each of the opposing positions is “better.” While you have your pot of bond money derived from taking SS at FRA, I waited until 70, banking on the 8% annual increase in SS benefits (a “bird in the hand”), which allowed me to be more aggressive in my equity positions in the years from FRA until I turned 70 (and beyond). I am certain this has resulted in much more portfolio gain than the strategy you executed. My point is not at all to boast about my outcome (I recognize that the stupendous gains were “lucky” in terms of the recent generosity of the market) or recommend my strategy to everyone, but to underline that neither my actions nor yours are necessarily better for anyone other than ourselves. Your proposition in this post (and many previous ones) aims to prove (whether stated or not) that your way is superior. As I noted, you deny this upfront, but then sneak it in at the end (actually, much more blatant than sneaking). You justify your approach with the old proverb about the “bird in the hand,” but misuse it. That proverb assumes a situation in which one should be satisfied with having something one already possesses, versus having nothing at all. So the comparison between FRA and waiting until 70 breaks down, because the latter is also a “bird in the hand” (albeit with a time delay). Of course, one has to make it to 70, but I daresay most folks in good health at FRA “do” make it to 70. I’m glad you’re happy with the strategy you executed; sounds like it worked out great “for you.” I’m also happy I chose to take my bird in the hand at 70, and glad for the investment freedom that gave me in the meantime, which worked out great “for me.”
I never said my way is the best except for us. I’m not selling anything to anyone. I liked having the SS money to invest during the time it was not needed rather than taking the risk of missing out. I also like the tax-free income we generate versus a higher taxable SS benefit. There is an element of gambling no matter what. But my bird is in our hands.
But, with respect, since you come back to this topic quite often, even after Jonathan says, “give it a rest,” and your protestations to the contrary, you are making an indirect claim (that shades over into direct) that your way is best. Your argument, to invoke another old sayings, is a “have my cake and eat it too” position. So, you say “I never said my way is the best, ” but then after listing all the points in favor of delaying, proclaim: “I’m not buying it,” instead of: “But these beneficial points do not equally apply to everyone.” Anyone can see in your current post, that after you say, “I’m not buying it,” you offer a series of arguments to show why your way is best. You can say “pay no attention to the man behind the curtain,” but we can see him!
There is nothing i can do about how people perceive my opinions.
Sometimes i feel I’m the only one who is not allowed to present my views because they sometimes do not follow conventional thinking.
But i often do wonder why anyone cares about my views, especially if they think i am off base. Jonathan tells me people complain when I state a position too often.
I guess I’m a lost cause as i was rewarded my entire working life for questioning the status quo, doing what i was told couldn’t be done.
In this case i thought i made it clear it’s a unique personal solution and so it is. You can go on YouTube and find so-called experts both for and against.
There’s obviously no problem with presenting your views, and you benefit the site greatly with your lively posting on many topics. But on this topic, you first say you’re okay with one way of looking at the issue, but then take it back. Your opinion is first that delaying SS may be okay. But then your opinion shifts down the page, where you provide reasons for why delaying is problematic. So, two opinions in the same piece that are in conflict. I’m just highlighting the shift of views presented in the same piece, and also pointing out how easy it is to boost one scenario over another by simply mixing up the assumptions (bonds here, equities there). It could be an endless game. Why care about your views? Is that not the point of the site? But the views should be consistent. If peoples’ circumstances differ and taking SS either at FRA or at 70 is beneficial for various reasons for various people, why do you spend so much time trying to poke holes in the case for delaying? One answer, I have suggested in my responses, is that you in fact think your way is best. You claim that that’s not what you’re about, but then why is that opinion offered again and again. I have no problem with you having that opinion. But then you cannot also have the opinion that different choices are okay for different people, or as you say just above: “it’s a unique personal situation.” If that is true, why the campaigning at the end of your piece about the apparent shortsightedness of those who choose to delay? Why do you care so much about those who chose to do SS differently than you did?
I have to inject some humor here, if I may be so permitted. Speaking only for myself, I care about your views because they’re interesting and also because, please don’t take offense anyone, sometimes the arguments they spark do cause me to chuckle. Is that a bad thing?
I was going for a little levity with my Oz allusion…
Everyone’s situation is different. There is a lot to think about and rules change. We had thought about doing the “file and suspend” until that loophole was closed recently for people our age. Some people have more investments to wait to claim until age 70. We don’t. Spousal benefits are something else to think about, as are survivor benefits. Singles have to think differently than a couple since they may not have access to these (thinking single after divorce situation). Couples who earn roughly the same amount may not have spousal benefits available. Lots to think about. Chris
Dick, I agree 100% with your statement I see concern about the overall “…lifetime benefits collected [are] completely irrelevant.” Retirement is about enjoying life, not making money.
Exactly. Waiting to get the biggest check at 75, when my knees are shot , back hurts and I’m ready to slow down? No way! BTW, do I pinch pennies between 62-70 to have a decdnt retirement? I plan on retirement at 57-58, 3 years from now. We have liquid assets to fund our lifestyle through 62, then boom💥! Take SS early and draw down some from 401k to reduce the traditional bucket. Enjoy the years if the good Lord allows through our go go years. We’ll be fine without the largest SS check I don’t want to miss the 10 years or $500k in SS payments for DW and I while I wait for a larger check which could be an extra $30k per year compared to taking it earlier. But then I need to live until aged 82, to break even. Like who the heck cares at that point.
If neither of you can draw a benefit until the primary wage earner does–i.e. the only benefit your spouse is eligible for is a spousal benefit–then waiting past FRA becomes much more problematic, since it’s a lot more expensive. It’s more difficult to construct a scenario where waiting in this case is more optimal, unless both spouses live a long time, and all SS money is needed to be spent immediately. But you wouldn’t know all that until you’re dead, so…
If both spouses are eligible for a benefit, as each has their own work record, then having the lower earner claim at (whenever needed, up to FRA) and the higher earner wait to claim ’til 70 seems a lot more optimal, in many cases.
We both took our SS as soon as we could.
Our main goal now is to leave the children – and grandchildren – as much money as we can.
The kids can inherit our investments.
They can’t inherit our SS.
I waited until 70. Chris retired at age 64 and started SS at that time. By virtue of my being born in 1952, I was able to collect a spousal benefit for 3 years until a turned 70. My tax business was hitting its stride during those years, so I just didn’t need my higher benefit. If I croak first Chris’s income from SS will nearly double.
As for taking my benefit sooner and investing it, I didn’t have the confidence that I could beat SS’s 8% annual increases. Also, the spousal benefit I collected made my decision easier.
I absolutely did not beat 8% as it was all invested in municipal bond funds, but now after 15 years there is a pool of investments generating $1600 a month in tax free income and even if Connie needs to rely on that income someday, there will still be assets to leave to our children.
Had we delayed from my age 66 to 70 (Connie’s is 4.5 years older) that difference would not exceed the tax-free income we generate today and there would be no accumulated assets. The added SS benefits would be 85% taxable.
I guess it’s a gamble and go either way.
At ages 76 and 75 we are receiving $3,280/month more than we would be receiving if we had claimed at our FRAs instead of waiting until 70, and that difference will continue to increase every year there is a SS COLA. Applying our 24% marginal tax rate to the 85% of our income that is taxable brings $3,280/month down to $2,611/month. I can’t imagine that our income would have increased by that amount if we had claimed at our FRAs and used our monthly SS benefits to purchase bonds until we reached 70.
But…that’s not an apples to apples comparison. The income you would derive from claiming at 70 starts immediately, it’s not delayed by 15 years. Where did that come from?
I also drew a spousal benefit for a few years, having been married to my divorced ex-husband for more than ten years. That plus my pension allowed me to delay until 70 without impacting my portfolio.
You missed the benefit that motivated me: higher base for future cost of living increases.
I agree with not caring about “breaking even”.
I guess that depends on the portion of total retirement income SS generates.
Right now my non-COLA pension is bigger than my SS. I expect that to change in the next few years.
Both true Kathy
Idk, Dick. Doug pondered this question, doing all kinds of research for years. Eventually he decided to wait until 70 to collect, but to take a spousal benefit on my account in the meantime. When he died six months before his 70th birthday, I knew to immediately switch to collecting a survivor’s benefit on his account. While I’m very grateful for the significant increase that gave me, I’m sometimes sad that he wasn’t more generous with himself (though always generous with me, our kids and grandkids). However, I don’t think that collecting a higher benefit in his lifetime would have changed his frugal ways much at all. And even though I don’t compare grocery store prices to the same extent that he did, I still have to tell myself “Go ahead, you can afford it,” when I pause before selecting a gourmet cheese. I wonder if upgrading from Best Western on my rare hotel stays will result in a better night’s sleep? Old habits die hard.