When To Take Social Security? Study takes a statistical approach.

[pb4uski]

Ok, so I thought I would try too, with FireCalc. I got my numbers for DW and I from the ssa.gov site, for ages 67-70.

Plugging 77% (haircut) of each them into FC, I got:

Age Average Amount
67 $9.11M
68 $9.17M
69 $9.25M
70 $9.42M

So, for the average of 117 scenarios, age 70 comes out ahead (for us). I *still* standby our plan to pull at 70.

I had always assumed that the values at various ages take the extra 8% per year into account. Is that true? But, I would not think it takes COLAs into account, since that is unknown yet.

I haven't done the work but I suspect that age 70 SS will work out better for anyone under FIRECalc because typically the FIRECalc time horizon is until mid to late 90s and well past the breakeven point.

On the last part, I think FIRECalc does take SS COLAs into account... remember that FIRECalc scenario runs are based on actual past history... so for each year FIRECalc increases spending for inflation and if you have SS or a COLA pension then it would increase the income from those sources for inflation the same way it increases spending for inflation as well. What I'm not sure of is whether FIRECalc uses the actual SS COLA for that historical year or just the same inflation rate used for spending.

 

[Luvtoride]

The links above leave a lot of open questions. The “original study” link below may be what the OP was looking for.

Bottom line, most people don’t start Soc Sec at the optimal age, most take it too early (see chart, though it doesn’t match text exactly). Most people do the exact opposite of their optimal WRT Soc Sec - that’s been well known (see quote).

https://maringroup.com/wp-content/uploads/2019/06/Retirement-Solution-Hiding-in-Plain-Sight.pdf

Midpack, thanks for sharing this clip from the article.
The chart and accompanying description that 70% start collecting SS by age 64 blew my mind!! I had no idea that it was that many collecting SS so early before FRA.

I guess I shouldn’t be surprised. Over the weekend I met a couple and we were talking about retirement. My view as to WHEN to retire has always been holistic as to assets, sources of income, spending levels, non-financial readiness, etc. This couple only spoke in terms of ages I.e. reaching 62 so they could start collecting SS.

 

[Midpack]

Midpack, thanks for sharing this clip from the article.
The chart and accompanying description that 70% start collecting SS by age 64 blew my mind!! I had no idea that it was that many collecting SS so early before FRA.

I guess I shouldn’t be surprised. Over the weekend I met a couple and we were talking about retirement. My view as to WHEN to retire has always been holistic as to assets, sources of income, spending levels, non-financial readiness, etc. This couple only spoke in terms of ages I.e. reaching 62 so they could start collecting SS.

Most of the guys I know started SS when they retired (early), some at 62, and they’re oblivious to optimizing. They didn’t really even think it over. When I tell them I’m waiting until 70 (I’m 69 now), most don’t understand why, but a few now realize why. But then most of the guys I know have rudimentary financial sense at best. So I don’t talk money with them…

My best buddy’s wife wants to wait to start Soc Sec but he wants her to take it NOW, I think she’s 63. He doesn’t get it.

About 57 percent of retirees would build more wealth through their life if they waited to claim until they were 70 years old (when only 4 percent of retirees currently claim), while only 6.5 percent of retirees would have more wealth if they claimed prior to turning 64 (when over 70 percent of retirees currently claim benefits).

 

[Surewhitey]

In my situation there are so many different variables. How will it affect ACA subsidies, FASFA loans and grants for my daughter, federal taxes and Roth conversions.

But the bottom line is I simply don't need the money right now. Just watching it month to month. Nice to know it's there if needed.

This is us on the ACA, but add in the Roth conversions, ER, age gap (6 years), so many more variables. We have enough after tax to carry us most of the way & early Roth conversions are a bonus. We just need to optimize the amount of conversions to ACA subsidies. Could be an every other year event. Haven't done that math yet...

Ideally the higher (older) will wait for 70 while the younger one @62-65 depending on healthcare options...

 

[latexman]

It seems to define "optimal" as getting the most money back. That isn't the only definition of optimal.

What objective function would you have them optimize?

Maximizing the SS $’s seems reasonable for those who can already afford to do so, and if the study convinces those that are on a path to probably not afford to do so, but have time to change their situation so they can, then folks come out ahead and the world is a better place!

I can’t really think of a better objective function to optimize and keep it somewhat simple.

 

[Rianne]

Might you post details in "Open Social Security" calculator: feature requests, bug reports, etc.?

If you do, either you or Mike Piper will learn something.

I believe it’s a glitch. It’s too big of a difference.

 

[SevenUp]

Might you post details in "Open Social Security" calculator: feature requests, bug reports, etc.?

If you do, either you or Mike Piper will learn something.

I believe it’s a glitch. It’s too big of a difference.

The question is, a glitch in what?

If the program is in error, you would be doing others a service by providing the tool creator a worked example so it could be fixed for all.

If your understanding is in error, it would be good for you to understand why, and not publicly malign the program.

 

[Rianne]

I haven't done the work but I suspect that age 70 SS will work out better for anyone under FIRECalc because typically the FIRECalc time horizon is until mid to late 90s and well past the breakeven point.

On the last part, I think FIRECalc does take SS COLAs into account... remember that FIRECalc scenario runs are based on actual past history... so for each year FIRECalc increases spending for inflation and if you have SS or a COLA pension then it would increase the income from those sources for inflation the same way it increases spending for inflation as well. What I'm not sure of is whether FIRECalc uses the actual SS COLA for that historical year or just the same inflation rate used for spending.

Is it based on 3% inflation, CPI, or PPI?

 

[skipro33]

It's not always about the bottom line. Having money when you are too old to enjoy having money is just as bad as not having it to begin with. Taking SS while you have your health and other debts covered can really increase your quality of life. And THAT is what the whole game is about: are you living the best life you can while you can.

 

[RetiredAt49]

For those of you (like me) who have never planned on SS and/or do not need SS to “pay the bills”, is it safe to assume that you took (or plan to take) SS at 62?

My in-laws both took their SS at 62 because their overall portfolio/assets easily covers their expenses.

 

[COcheesehead]

I don't see any recognition given to the "time value of money" in the study.

Delaying SS by its very nature accounts for it. It goes up every year you wait.

 

[ncbill]

Probably 67 for both of us since the spousal payment doesn't increase past FRA.

Watched relatives take it at 62 ("it's MY money!!!") even though they didn't need to take it so early.

They have all lived long enough that they wish they had waited since they really could use a higher monthly payment now.

 

[latexman]

For those of you (like me) who have never planned on SS and/or do not need SS to “pay the bills”, is it safe to assume that you took (or plan to take) SS at 62?

I’ve never had the thought that I don’t need SS, though I could get by if it was not there for me. My thoughts are, I paid for it, and Medicare Part A, I’m entitled to it, and, by golly, I’m going to optimize my claiming strategy and get what’s mine!

 

[oldtimer]

I’ve never had the thought that I don’t need SS, though I could get by if it was not there for me. My thoughts are, I paid for it, and Medicare Part A, I’m entitled to it, and, by golly, I’m going to optimize my claiming strategy and get what’s mine!

If that is the case, then why only get 70% at 62? Why not wait until at least FRA to get 100%?

 

[MarieIG]

For those of you (like me) who have never planned on SS and/or do not need SS to “pay the bills”, is it safe to assume that you took (or plan to take) SS at 62?

My in-laws both took their SS at 62 because their overall portfolio/assets easily covers their expenses.

No.

 

[jazz4cash]

I can’t find the actuarial table that was linked to one of these threads, but studying it carefully may have convinced me to start SS sooner instead of later. I never actually studied my own individual life expectancy based on age and race, but now I see it is much less than the general population. I think family history is more important and more favorable to my longevity, but I am reviewing my options. I am FRA + 1 yr right now.

 

[SevenUp]

For those of you (like me) who have never planned on SS and/or do not need SS to “pay the bills”, is it safe to assume that you took (or plan to take) SS at 62?

You'd lose the bet if it were on us.

Delaying to age 70 for the higher earner, and (at least) to FRA for the lower earner, allows
a) more room for Roth conversions, and
b) the highest SS income for the surviving spouse.

Because the likely surviving spouse is the one least familiar with things financial, this reduces the likelihood of needing to juggle investment sales and withdrawals to meet cash flow needs.

 

[pb4uski]

Is it based on 3% inflation, CPI, or PPI?

See the Spending Models tab... it supports all 3, but CPI is the default but you can change it to PPI or a constant rate of inflation that you input.

 

[RetiredAt49]

I’ve never had the thought that I don’t need SS, though I could get by if it was not there for me. My thoughts are, I paid for it, and Medicare Part A, I’m entitled to it, and, by golly, I’m going to optimize my claiming strategy and get what’s mine!

I guess to simply what I'm asking/saying... is if I don't need SS (because my other sources of income is large enough to cover all expenses) why wait/delay taking SS. I get the sentiment (I paid for it so by golly I'm going to start collecting it) but wouldn't it suck to delay SS payments until I'm 70 and then die on my 70th birthday?

My thought would be to collect SS at 62 (because I don't really need it at any age) and either BTD and/or add it to my Roth accounts and/or taxable brokerage accounts.

 

[pb4uski]

It's not always about the bottom line. Having money when you are too old to enjoy having money is just as bad as not having it to begin with. Taking SS while you have your health and other debts covered can really increase your quality of life. And THAT is what the whole game is about: are you living the best life you can while you can.

IF you have money and can defer SS what you say is a red herring... there is no reason why you can't have the best of both worlds. Money is fungible. If you have money you can spend what you want in your 60s knowing that when you turn 70 you will be getting a higher SS benefit.

 

[11522914]

IF you have money and can defer SS what you say is a red herring... there is no reason why you can't have the best of both worlds. Money is fungible. If you have money you can spend what you want in your 60s knowing that when you turn 70 you will be getting a higher SS benefit.

Exactly. Totally agree.

 

[PatrickA5]

I guess to simply what I'm asking/saying... is if I don't need SS (because my other sources of income is large enough to cover all expenses) why wait/delay taking SS. I get the sentiment (I paid for it so by golly I'm going to start collecting it) but wouldn't it suck to delay SS payments until I'm 70 and then die on my 70th birthday?

My thought would be to collect SS at 62 (because I don't really need it at any age) and either BTD and/or add it to my Roth accounts and/or taxable brokerage accounts.

Some people don't think about SS at all (in advance) and just take it at 62.

Others are obsessed with trying to figure out how to get the absolute maximum from SS. Of course, that's impossible unless they know their death date, future investment returns, etc.

For most people (on this forum) it isn't going to make any meaningful difference in their lives and they should just take it whenever they feel like it.

I took at 62. DW will (probably) take at 70, but maybe sooner. I need to do some more calculations.

 

[MarieIG]

You'd lose the bet if it were on us.

Delaying to age 70 for the higher earner, and (at least) to FRA for the lower earner, allows
a) more room for Roth conversions, and
b) the highest SS income for the surviving spouse.

Because the likely surviving spouse is the one least familiar with things financial, this reduces the likelihood of needing to juggle investment sales and withdrawals to meet cash flow needs.

Ditto

 

[pb4uski]

... My thought would be to collect SS at 62 (because I don't really need it at any age) and either BTD and/or add it to my Roth accounts and/or taxable brokerage accounts.

How do you add SS to your Roth?

 

[latexman]

If that is the case, then why only get 70% at 62? Why not wait until at least FRA to get 100%?

Our SS claiming stradegy is DW @ FRA and me @ 70. That's what opensocialsecurity recommended for us.