Buddy of mine keeps telling everyone Soc Sec breakeven age is 86?

No, I caught it the first time. I had "on these boards" twice in my reply. It's the breakeven analyses being presented as if they were stand-alone, without other considerations as to when to take SS, that prompted my first post.

An omission, rather than a statement otherwise.
 
When I was investigating when to take SS it was obvious that waiting until 70 was better for me . But then when I factored in my spouse's SS things changed quite a bit. I also in the end made the assumption that both my spouse and I would live to at least the mid 80's.
I used a website which is gone now but was similar to open social security site.
It used a real 4% return on investments saved by starting early.
The best end result turned out to be for me to start at 62 and my spouse at FRA. That produced the best result up to age 92.
Age 70 has come and gone and our returns were about 9% during those years.

Our age differences was a big factor in the outcome. It is not a simple decision, for best results use the open social security site for your decision and your assumptions may be different than ours.
 
This is a timely thread. Thank you so much. Though I think I ran these numbers in the past, in more recent years I just assumed both DH and I would wait until age 67. We don't need the money right now so I figured, why not wait? Well my birthday is this month and I ran it on Open Social Security and it is telling me that, optimally, I should start taking mine next month at age 62 and DH should take his at age 70. Like I said, we don't need the money now and yet prognosis for DH's health in the future is pretty grim, due to a genetic trait he has likely inherited. Still likely to live well into his 80's should he choose, though quality of life severely compromised. I am thinking it's time to really BTD and do what open social security is telling us is optimal...
 
TickTock said:
No, I caught it the first time. I had "on these boards" twice in my reply. It's the breakeven analyses being presented as if they were stand-alone, without other considerations as to when to take SS, that prompted my first post.

An omission, rather than a statement otherwise.
Click to expand...
Not true. But it's worthwhile to have the breakeven correct while evaluating the other considerations to arrive at your best claiming age option.
 
Midpack said:
Not true.
Click to expand...
If you're referring to this thread, I agree. In the first post you said: "Yes, I realize there are many very good reasons to take SS before age 70. But a breakeven age of 86 isn’t one of them…" I was being more general.

Midpack said:
But it's worthwhile to have the breakeven correct while evaluating the other considerations to arrive at your best claiming age option.
Click to expand...

Absolutely.
 
Midpack said:
I’m sure he’s wrong, but he keeps telling everyone else the SS breakeven age is 86, where everything I read suggests it’s 81 plus/minus depending on details. He took SS early, as most of my peers did, and unfortunately almost all of them are financially illiterate. I am not trying to embarrass him, or make others regret taking SS early - I just wish I could get him to stop giving others bad information. Now that he’s done it several times, I plan to privately ask him for a source of his breakeven claim, not hopeful but we’ll see.

The only way it could be 86 would be a set of highly unlikely circumstances, such as taking SS early and investing it all in a portfolio with well above average returns - that’s risky at best. I seriously doubt many people take SS early and invest it. And if you can afford to invest it, no reason you couldn’t invest the money starting at any age thru 70.

Yes, I realize there are many very good reasons to take SS before age 70. But a breakeven age of 86 isn’t one of them…
Click to expand...
the break even point as far as SS goes has nothing to do with how you'd invest the money. it simple means those that took it, at say, 62, got a lot more (but smaller ants) payments than thos who took it at 65,66,67,68,69 or 70..For ex, at 70 , they already have ,96 payments they've already gotten if took at 62..so definitely, t age 70, the one who took it at 62 wins .I used to hear the break even point was 83..I believe it may have changed, purely mathematically, at age 85 or so. it's arithmetic. nothing to do with investments.
 
Midpack said:
Few if any of my peers could afford, much less invest well, their SS benefits.
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Well, that's the thing. If you can't afford to invest your SS benefit, that means you need the SS for living expenses. And that means that you cannot afford to defer until you hit 70.
 
You won't know the real answer until you know exactly when you would die. And factor such as a disabled child, a lot in pre-tax retirement accounts, or a spouse without any SS benefit, and your health are all factors in when to file.
Read Guide to Retirement
 
Midpack said:
I’m sure he’s wrong, but he keeps telling everyone else the SS breakeven age is 86, where everything I read suggests it’s 81 plus/minus depending on details. He took SS early, as most of my peers did, and unfortunately almost all of them are financially illiterate. I am not trying to embarrass him, or make others regret taking SS early - I just wish I could get him to stop giving others bad information. Now that he’s done it several times, I plan to privately ask him for a source of his breakeven claim, not hopeful but we’ll see.

The only way it could be 86 would be a set of highly unlikely circumstances, such as taking SS early and investing it all in a portfolio with well above average returns - that’s risky at best. I seriously doubt many people take SS early and invest it. And if you can afford to invest it, no reason you couldn’t invest the money starting at any age thru 70.

Yes, I realize there are many very good reasons to take SS before age 70. But a breakeven age of 86 isn’t one of them…
Click to expand...
I think the breakeven analysis for SS is a fallacy. Everyone’s situation is different and there is one variable that can blow up the analysis- date you will die. We took ours at 64, after we let go of our final consulting and part time gigs. Between my pensions and our SS we don’t need to pull much out of our IRA’s. Also, no state tax on SS where we live. Ou big goal; leave a legacy for our kids.
 
Social Security is a pure longevity insurance play. Seeing it as an “investment” with a break even point is misguided. You can’t get inflation-protected longevity insurance at a better price than Social Security offers. Especially for longer living females.
 
2retireearly said:
the break even point as far as SS goes has nothing to do with how you'd invest the money. it simple means those that took it, at say, 62, got a lot more (but smaller ants) payments than thos who took it at 65,66,67,68,69 or 70..For ex, at 70 , they already have ,96 payments they've already gotten if took at 62..so definitely, t age 70, the one who took it at 62 wins .I used to hear the break even point was 83..I believe it may have changed, purely mathematically, at age 85 or so. it's arithmetic. nothing to do with investments.
Click to expand...
:facepalm: You’re exactly the kind of person who might fall for my buddy’s unsubstantiated claim that breakeven is 86…thanks for making my point.
 
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You just need to know how long you will live. Then its simple math. :angel:
 
almost there said:
You just need to know how long you will live. Then its simple math. :angel:
Click to expand...
While none of us know for sure, many of us can make an educated guess and base our SS claiming age on that. That will pan out for most, though not all. My parents lived well into their 90’s, so odds those in the same (family longevity) cohort as me can benefit by waiting to age 70. If everyone in your family died of heart disease in their 50’s, that cohort might be wise to claim SS at 62. Saying nobody knows so just take it at 62 is burying one’s head in the sand. I’m done with this thread…
 
Midpack said:
I’m sure he’s wrong, but he keeps telling everyone else the SS breakeven age is 86, where everything I read suggests it’s 81 plus/minus depending on details. He took SS early, as most of my peers did, and unfortunately almost all of them are financially illiterate. I am not trying to embarrass him, or make others regret taking SS early - I just wish I could get him to stop giving others bad information. Now that he’s done it several times, I plan to privately ask him for a source of his breakeven claim, not hopeful but we’ll see.

The only way it could be 86 would be a set of highly unlikely circumstances, such as taking SS early and investing it all in a portfolio with well above average returns - that’s risky at best. I seriously doubt many people take SS early and invest it. And if you can afford to invest it, no reason you couldn’t invest the money starting at any age thru 70.

Yes, I realize there are many very good reasons to take SS before age 70. But a breakeven age of 86 isn’t one of them…
Click to expand...
My wife and I delayed until 70. I would certainly suggest for any couple with one of the spouses with a known medical condition that could limit longevity to have the lower earning spouse collect early. Beyond the benefit of 8% annual increases in income are a larger base for COLA increases, a larger base for tax free status, in the early non SS years take IRA draws at 10-12% marginal tax rates and avoid or delay the Social Security "Tax Torpedo" - the ramping of taxable benefit from 15-85%. With the larger SS income from 70-72, I expect to pay little tax and then jump over the 'torpedo' once RMDs start at 73. I believe a lot of people that collect early walk right into 40% + marginal tax rates as their taxable SS income ramps to 85% taxable. Anyone collecting early needs to understand how the taxes work. Take a look at the SS tax calculation worksheet in TurboTax - its complicated. I calculate the breakeven to be young 80s taking into account the items above. From an actuarial standpoint - SS did a pretty good job keeping the decision 'neutral'.
 
2retireearly said:
the break even point as far as SS goes has nothing to do with how you'd invest the money. it simple means those that took it, at say, 62, got a lot more (but smaller ants) payments than thos who took it at 65,66,67,68,69 or 70..For ex, at 70 , they already have ,96 payments they've already gotten if took at 62..so definitely, t age 70, the one who took it at 62 wins .I used to hear the break even point was 83..I believe it may have changed, purely mathematically, at age 85 or so. it's arithmetic. nothing to do with investments.
Click to expand...
Investment returns are a legitimate factor, because if you delay SS then you are presumably using savings of some sort for living expenses so you earn less interest and dividends from your retirement savings.

Do you really think that so many of us would be debating the most appropriate rate to use if it was irrelevant as you claim? :facepalm:
 
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Midpack said:
While none of us know for sure, many of us can make an educated guess and base our SS claiming age on that. That will pan out for most, though not all. My parents lived well into their 90’s, so odds those in the same (family longevity) cohort as me can benefit by waiting to age 70. If everyone in your family died of heart disease in their 50’s, that cohort might be wise to claim SS at 62. Saying nobody knows so just take it at 62 is burying one’s head in the sand. I’m done with this thread…
Click to expand...
+1 I rely on the SOA Longevity Illustrator and the Northwestern Mutual Lifespan Calculator. Both of those suggest that we will live into our early 90s, well beyond the point where delaying SS makes sense, even with the time value of money included.

Lifespan Calculator – Test Your Life Expectancy || NM

Test your life expectancy with the Lifespan Calculator from Northwestern Mutual.
media.nmfn.com media.nmfn.com
 
Things like your personal tax situation come into play. But most "experts" have always said generally that 82 is the break even point if you take SS at 70. No idea if its accurate. But 82 has been thrown around for many years as the magic number. If you got a late start doing things like Roth conversions, waiting may easily be your best option. One size does not fit all when it comes to SS. And when you take it is a personal issue. No winners or losers.
 
GoodLife59 said:
I think the breakeven analysis for SS is a fallacy. Everyone’s situation is different and there is one variable that can blow up the analysis- date you will die. We took ours at 64, after we let go of our final consulting and part time gigs. Between my pensions and our SS we don’t need to pull much out of our IRA’s. Also, no state tax on SS where we live. Ou big goal; leave a legacy for our kids.
Click to expand...
Taking SS early does not necessarily mean you're doing the best to leave a good legacy for your kids. If you're going to spend the same amount no matter when you take SS, then every month you life past the breakeven means you're amassing more each month with the larger SS benefit you got by delaying.
 
Evee said:
I plan to take it early and invest it. The breakeven age is around 85 at 7% Look at page 12
am.jpmorgan.com

Guide to Retirement

Discover our Guide to Retirement, updated annually to provide you with an effective framework for supporting retirement planning conversations with clients.
am.jpmorgan.com am.jpmorgan.com
Click to expand...

Greetings:

If you don' t take social security early, the benefit grows at 8%. That's a long term growth rate that's hard to beat and it's certain.

Also, what I don't like about the "take it early and invest" discussions is that you have to be very careful how you consider this "investment." At age 62, or any other age, you're going to spend money to live on.. Whether that comes out of social security or some other asset, your living expenses are going to be paid. Social Security is just one type of income stream and there's nothing special about investing this money vs investing other monies.

People should take Social Security early if they need the money to live on (of course), if they are going to die young for some reason, or if they have other investments that are certain to grow more than 8%.
 
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