Misleading/False SS benefit information?

[rcbrad]

I am not sure if this is in the right forum, the forum descriptions do not mention SS



I had read in the AARP bulletin and also on Consumerreports.org that if you wait until age 70 to take SS you will maximize your lifetime benefits, assuming you live the average life expectancy!?


I know that this has been discussed to death, but I thought that the true answer is that you generally receive the same amount regardless of when you start to take it. (assuming you live the average life expectancy) Generally, I thought that the GOVT intends for you to receive the allotted amount you earned, no matter when you start taking it.



I thought that it sounded very irresponsible for these noteworthy and credible publications to make such a statement.


Just wondered what others thought about this? Thanks!

 

[joeea]

I had read in the AARP bulletin and also on Consumerreports.org that if you wait until age 70 to take SS you will maximize your lifetime benefits, assuming you live the average life expectancy!?

Are these the articles you read?
https://www.aarp.org/work/social-security/info-2015/maximize-social-security-benefits.html

https://www.consumerreports.org/retirement-planning/how-to-maximize-social-security-benefits/

I don't see anything that says "average life expectancy" here? More likely whatever you read indicated that you will get more if you live "past the average life expectancy". Of course that's a big simplification.

I know that this has been discussed to death, but I thought that the true answer is that you generally receive the same amount regardless of when you start to take it. (assuming you live the average life expectancy) Generally, I thought that the GOVT intends for you to receive the allotted amount you earned, no matter when you start taking it.

They intended that - past tense - when the current rules were set up.

The life expectancies have changed since then, so it no longer holds quite true. Certainly you have read about that.

I thought that it sounded very irresponsible for these noteworthy and credible publications to make such a statement.

Not irresponsible. Perhaps a bit over-simplified as some get confused if the details are mentioned.

 

[rcbrad]

In the NOV AARP bulletin it says: (word for word)



IT PAYS TO WAIT


"The Math is clear: Wait until age 70 if you can. That will maximize monthly and lifetime benefits, assuming you live to the average life expectancy."


My understanding is that if you live the average life expectancy, in the long run you will receive the same dollar amount of benefits regardless of when you start taking them.



When I read statements like that it does sound irresponsible/untrue to me. (providing that my understanding of how SS works mentioned above is correct) I was surprised to read this.

 

[Crabby Mike]

I guess the point is that if you live to the average life expectancy, you're likely to live beyond it (since you wouldn't necessarily die that day).

 

[W2R]

Yes, this topic has been discussed to death but I admit it, I still love posting about it. ("So sue me!" just joking around.) Sorry if the following post is too long for most people.

My understanding is that if you live the average life expectancy, in the long run you will receive the same dollar amount of benefits regardless of when you start taking them.

I think that the actuaries at SS are probably pretty good, and that those who claim early probably get about the same total amount as those who claim late, statistically speaking. Or at least that was the case when they last worked on this.

However, they don't take gender and family history into account. We are individuals and not statistics. Women on average live longer than men; yet both are lumped in together in the actuarial analysis. For my own decision I considered the facts that I am female; I have some ancestors with extreme longevity; and I am a bit of a security junkie and I know that. So, I waited until age 70.

But since F is male and those in his family have a normal degree of longevity, he chose to claim his SS at 62. He is fine with that and I thought that was a reasonable decision for him, even though I waited until 70.

One factor that nobody (even AARP and Consumer Reports) seem to consider, is the value of money to an individual at a particular time. Think about this; what would $10K have meant to you at the poorest time in your life, compared with times when you had a bigger income? $10K would have meant the world to me when I was young and poor and wondering where my next meal was coming from, compared with what it means to me now when I already have my bare bone expenses covered.

Along these lines, to me it helps to envision what life will be like when elderly. I might be spending more on various uncovered health care expenses, plus I may not get as much pleasure from active pursuits as when younger. Being old can be a bit of a drag for some, as one watches ones friends and relatives croak one by one while experiencing old age aches and pains for oneself for the first time. So, a little extra spending money at that time might be nice to have as some sort of compensation.

Anyway, I guess the point is that I am enjoying my larger SS deposits right now and I am glad I decided to do things this way. But that doesn't mean that delaying until age 70 is the right decision for Frank or for others.

 

[braumeister]

I think people get hung up unnecessarily on the concept that when you take SS is "actuarially neutral".

That's a simple statement, but fraught with difficulty because of its unstated assumptions. Things like the assumption that you're single, for example.

But the easiest way to cut that Gordian knot of complexity is to realize that it's actuarially neutral FOR THE GOVERNMENT, not necessarily for the individual. After all, they're dealing with huge numbers of people, so averages are much more meaningful than they are for us.

If you want to figure out the best strategy, it's really pretty easy to do. Start with the date you're going to die, and calculate backward from then.

 

[easysurfer]

My plan is to wait, but must admit, I'm tempted to take SS earlier just in case I kick the bucket sooner than expected.

 

[Chuckanut]

Anyway, I guess the point is that I am enjoying my larger SS deposits right now and I am glad I decided to do things this way. But that doesn't mean that delaying until age 70 is the right decision for Frank or for others.

This makes to much sense. I am going to make sure you are still on my list of Dangerous Radicals who infest this group.

 

[marko]

My plan is to wait, but must admit, I'm tempted to take SS earlier just in case I kick the bucket sooner than expected.

Or if they decided to change the rules/reduce the benefits in the next few years.

"Take the money and run" has served me well most of my life and I applied it here as well. (SS @ age 62)

 

[footenote]

I was the higher-earning spouse in my marriage. DH took SS at FRA.

I had assumed that, if I remained healthy, I might wait until 70 to take SS. But then I ran a spreadsheet with my anticipated max longevity and discovered waiting until 70 probably won't make sense.

My longevity inputs:
Mom died at 68
Dad (who was non-smoking health nut who still fit in his AF uni) died at 78

I'm a cancer survivor, but even if you give me really good odds with those parental inputs, I would be surprised to see 85. (I know, I *might*.) But even living to 85, I'm better off taking SS at FRA than at 70.

Jokes about "know when you'll die" aside, take a hard look at longevity. Those who have relatives who made it past 90 should be conservative. The rest of us... maybe not.

 

[W2R]

This makes to much sense. I am going to make sure you are still on my list of Dangerous Radicals who infest this group.

ROFL!!! That's me, "Dangerous Radical W2R". (I love the comments on this forum! Thank you!) I temporarily changed my avatar to the REAL me...

 

[timo2]

Because of the actuarial stuff, If it was just me, I would take SS at my FRA, which was this past DEC 1. But the survivor benefits for DW are what I'm interested in, and I want to get those as large as possible. Even if there is a future 30% reduction, it is still 30% off of the highest amount.

 

[MarieIG]

This makes to much sense. I am going to make sure you are still on my list of Dangerous Radicals who infest this group.

 

[pb4uski]

A picture.... now... how long will you live?

According to the American Academy of Actuaries, who compile the statistics used by life insurance companies, a 21-year-old non-smoking male in good health is expected to live to 80. A 60-year old non-smoking male in good health is expected to live to age 84.

So it is fair to say that if you live to an average age of 84+ that waiting until 70 maximizes your lifetime benefits since the breakeven point is age 80.

 

[joeea]

In the NOV AARP bulletin it says: (word for word)



IT PAYS TO WAIT


"The Math is clear: Wait until age 70 if you can. That will maximize monthly and lifetime benefits, assuming you live to the average life expectancy."


My understanding is that if you live the average life expectancy, in the long run you will receive the same dollar amount of benefits regardless of when you start taking them.



When I read statements like that it does sound irresponsible/untrue to me. (providing that my understanding of how SS works mentioned above is correct) I was surprised to read this.

I guess you can call the headline writer irresponsible if that is your preference. I don't see the point.

 

[indiajust]

All articles I have read state that for the "average" person who actually lives/dies exactly as predicted, total payout to that point is a wash. System was designed this way. Not an accident.

If you are not average, file accordingly to improve your situation. With the understanding that if you file late and die young (or file early and live long)... LOSE. Live and die close to the expected date, makes no difference.

 

[skipro33]

Even if there is a future 30% reduction, it is still 30% off of the highest amount.

Says who exactly? Politicians may just decide that if you could float your own financial solvency to age 70, then you just plain do not NEED SS at all perhaps. Means testing is likely as not to be part of the calculation when deciding to reduce SS benefits in the future.

I can imagine those who make the rules deciding that everyone gets the same amount for SS and not base it on how much any one individual contributed.

 

[rcbrad]

All articles I have read state that for the "average" person who actually lives/dies exactly as predicted, total payout to that point is a wash. System was designed this way. Not an accident.

If you are not average, file accordingly to improve your situation. With the understanding that if you file late and die young (or file early and live long)... LOSE. Live and die close to the expected date, makes no difference.

Yes thank you! That was my understanding too, in which I spent a fair amount of time reading/becoming educated on the subject. When AARP stated this, it made me pause. The general statement I read from AARP said if you wait you will maximize your lifetime earnings. I found it misleading and could cause people to become ill informed.



It was surprising to read this from AARP without any context to it. I find that many people think they will actually earn more if they wait. (again based on an average person who dies as predicted) So many articles make this announcement of earning more or earning a "bonus" without any if's and's or but's.

 

[skipro33]

The problem with a chart like this is that it assumes the funds received are spent and are not offsetting other investments that otherwise would have been spent.

Taking SS at 62 preserves personal savings/IRA/retirement funds that continue to grow for example. Or maybe taking SS at 62 is invested in an index fund until FRA or max age when SS could have been drawn on later.

The fact is; deciding on when to take SS is only part of the formula of ascertaining one's lifetime personal wealth.

 

[joeea]

This might help:
https://obliviousinvestor.com/social-securitys-actuarial-neutrality/

 

[street]

The problem with a chart like this is that it assumes the funds received are spent and are not offsetting other investments that otherwise would have been spent.

Taking SS at 62 preserves personal savings/IRA/retirement funds that continue to grow for example. Or maybe taking SS at 62 is invested in an index fund until FRA or max age when SS could have been drawn on later.

The fact is; deciding on when to take SS is only part of the formula of ascertaining one's lifetime personal wealth.

Exactly! One size doesn't fit all.

 

[pb4uski]

The problem with a chart like this is that it assumes the funds received are spent and are not offsetting other investments that otherwise would have been spent.

Taking SS at 62 preserves personal savings/IRA/retirement funds that continue to grow for example. Or maybe taking SS at 62 is invested in an index fund until FRA or max age when SS could have been drawn on later.

The fact is; deciding on when to take SS is only part of the formula of ascertaining one's lifetime personal wealth.

Actually, you couldn't be more wrong... the chart doesn't assume anything with respect to how the SS received is used... to the chart, it doesn't matter whether it is spent or saved... you're reading something into it that isn't there.

All the chart does is to show the cumulative amount received, excluding COLA adjustments, if you start SS at 62 or 66 or 70 and where the aggregate amounts received crossover (aka breakeven).

The chart doesn't advocate for one alternative vs the other... it just lays out the facts.

The OP thought that it was irresponsible for certain articles to claim that "if you wait until age 70 to take SS you will maximize your lifetime benefits, assuming you live the average life expectancy" and the chart, along with information from the SoA on average life expectancy just says that it is not outlandish to say that if you wait until age 70 to take SS you will maximize your lifetime benefits, assuming you live the average life expectancy.

Now I agree that there are other factors to consider in deciding an SS claiming strategy, particularly the time value/opportunity cost of money, but that isn't relevant to the question at hand so your objections are off-point.

 

[skipro33]

Actually, you couldn't be more wrong... the chart doesn't assume anything with respect to how the SS received is used... to the chart, it doesn't matter whether it is spent or saved... you're reading something into it that isn't there.

All the chart does is to show the cumulative amount received, excluding COLA adjustments, if you start SS at 62 or 66 or 70 and where the aggregate amounts received crossover (aka breakeven).

The chart doesn't advocate for one alternative vs the other... it just lays out the facts.

The OP thought that it was irresponsible for certain articles to claim that "if you wait until age 70 to take SS you will maximize your lifetime benefits, assuming you live the average life expectancy" and the chart, along with information from the SoA on average life expectancy just says that it is not outlandish to say that if you wait until age 70 to take SS you will maximize your lifetime benefits, assuming you live the average life expectancy.

Now I agree that there are other factors to consider in deciding an SS claiming strategy, particularly the time value/opportunity cost of money, but that isn't relevant to the question at hand so your objections are off-point.

Then at the very least, the chart is useless. The 'benefit' is a tangible asset. SS administration recognizes this by assigning value to the actuarial table it's based on as well as predictions of a stable and flat inflation rate for calculating COLA. The recipients of the benefit are not being advised to do the same. Rather, they are being encouraged to ignore the same aspects that SSA engages in when making a value determination on when to take SS.

 

[Scuba]

ROFL!!! That's me, "Dangerous Radical W2R". (I love the comments on this forum! Thank you!) I temporarily changed my avatar to the REAL me...

[emoji23] Love the new avatar!

 

[pb4uski]

....The 'benefit' is a tangible asset. ...

Wrong again... you're on a roll. Perhaps you should stick to skiing.

A tangible asset is an asset that has a physical form. Tangible assets include both fixed assets, such as machinery, buildings and land, and current assets, such as inventory. ...