My SS Decision Contemplation and Analysis

[Romer]

@Flieger You have done a lot of work for this evaluation to find out what is the best decision for you. This is a highly personal decision with many factors that can be personal in nature where it may disagree with a mth only evaluation. Nice work!

For example, I paid off my house before I retired even though the math showed I would have been better not to. The difference wasn't a lot and what it meant to me to retire without any debt was more important than the $$ I would have gained not paying it off. I had 4 years on a 15 year left.

The math and Open Security.com told me the optimum time was for my wife at 63(which we did) and me at 68.5 years with her switching to spousal benefits then.

One of my goals is to complete my Roth conversions so there will be no tax on withdrawls and no RMDs.

I relooked this year (Run it every year) and noticed if I took it starting in Jan 2027 at age 65.5, the difference in present value according to Open Security.com would be $18K.

I am fortunate enough to have a pension and that with Social Security for me and my wife will provide enough income to cover all my expenses and travel. I would only need to withdraw $10-$15K a year to cover our recent desire for Suites on Cruise ships. That withdrawl rate would be about 1%. We could go back to Balconies and not need to make any withdrawals if needed.

I was concerned about the survival benefit, but figured out that my wife would be fine with what she would get with our investements and assets and never run out of money. The kids would still get quite a bit, but we won't tell them or they may hurry it up

I figured out that I could take SS in 2027 and complete my Roth Conversions by 2033 staying in the 12% tax bracket or faster if I want to pay more tax, which I don't.

Not having to make larger withdrawals makes the investment accounts healthier for the long term and that is what protects my wife more than spousal. It reduces my withdrawals by $200K from age 65.5 to age 68.5 which is a significant chunk of change.

The math says its better to wait, but there are a lot of factors other than math and many of them personal.

You have to do what is right for you. For many, waiting until age 70 is the right answer. The best value to me is 65.5

It looks like you have done the work to determine the best value to you.

 

[Flieger]

@Flieger You have done a lot of work for this evaluation to find out what is the best decision for you. This is a highly personal decision with many factors that can be personal in nature where it may disagree with a mth only evaluation. Nice work!

For example, I paid off my house before I retired even though the math showed I would have been better not to. The difference wasn't a lot and what it meant to me to retire without any debt was more important than the $$ I would have gained not paying it off. I had 4 years on a 15 year left.

The math and Open Security.com told me the optimum time was for my wife at 63(which we did) and me at 68.5 years with her switching to spousal benefits then.

One of my goals is to complete my Roth conversions so there will be no tax on withdrawls and no RMDs.

I relooked this year (Run it every year) and noticed if I took it starting in Jan 2027 at age 65.5, the difference in present value according to Open Security.com would be $18K.

I am fortunate enough to have a pension and that with Social Security for me and my wife will provide enough income to cover all my expenses and travel. I would only need to withdraw $10-$15K a year to cover our recent desire for Suites on Cruise ships. That withdrawl rate would be about 1%. We could go back to Balconies and not need to make any withdrawals if needed.

I was concerned about the survival benefit, but figured out that my wife would be fine with what she would get with our investements and assets and never run out of money. The kids would still get quite a bit, but we won't tell them or they may hurry it up

I figured out that I could take SS in 2027 and complete my Roth Conversions by 2033 staying in the 12% tax bracket or faster if I want to pay more tax, which I don't.

Not having to make larger withdrawals makes the investment accounts healthier for the long term and that is what protects my wife more than spousal. It reduces my withdrawals by $200K from age 65.5 to age 68.5 which is a significant chunk of change.

The math says its better to wait, but there are a lot of factors other than math and many of them personal.

You have to do what is right for you. For many, waiting until age 70 is the right answer. The best value to me is 65.5

It looks like you have done the work to determine the best value to you.

Thanks Romer, I appreciate your statement and personal example/choices made.

I think this calculation (bolded above) is what is missing in the OpenSocialSecurity website, so you have to look at it on your own. I'm looking at the difference of the increased lifelong SS when delaying, vs the decreased WD's and with some encouragement from others here, the subsequent increase from growth, and in my case it seems the latter wins.

Some (many?) here are already in a place of one spouse SS and a pension or having done a fantastic savings job with no setbacks (like I had) providing all that is needed for them, and that is great! I wish that was me. But alas, it is not so my calculation considers 2 options - continue full WD's to supplement DW's SS, or decrease those WD's by adding in my SS, decreasing and hopefully over a 20 year period benefiting from the additional growth of those delayed WD's.

Well, I guess there's option 3, reduce WD's without SS and live without travel or other things that I hoped for in retirement, sell our home, etc. but that is just not what I want, or am willing to do.

 

[all4j]

Flieger, I’m still trying to understand & hope you’ll set me straight. It seems to me there are some unspoken assumptions that may not matter in your case, but might in mine. I believe you’re using $4013/month SS benefits at FRA as a default, constant spend rate. Since age 65 benefit falls short, you supplement with IRA. But since it isn’t adjusted for cpi, there is a reduction in real spent dollars every year, which may be appropriate as you transition toward slow/no go years. If there are extra, unspent dollars, they don’t seem to be accounted for. Also, still focusing on the age 65 vs 67, the extra ~$67k withdrawn, doesn’t seem to change your RMDs, but still matches your spend?

I know some prefer to front load spend, regardless of impact on total $s. Often, makes sense. Almost always a change in where $s are spent. The $105k additional over 20 years is just a little over $100/month or about 2.5%. Not sure level of accuracy you are shooting for – I do appreciate your concern about too many variables.

 

[Flieger]

Flieger, I’m still trying to understand & hope you’ll set me straight. It seems to me there are some unspoken assumptions that may not matter in your case, but might in mine. I believe you’re using $4013/month SS benefits at FRA as a default, constant spend rate. Since age 65 benefit falls short, you supplement with IRA. But since it isn’t adjusted for cpi, there is a reduction in real spent dollars every year, which may be appropriate as you transition toward slow/no go years. If there are extra, unspent dollars, they don’t seem to be accounted for. Also, still focusing on the age 65 vs 67, the extra ~$67k withdrawn, doesn’t seem to change your RMDs, but still matches your spend?

I know some prefer to front load spend, regardless of impact on total $s. Often, makes sense. Almost always a change in where $s are spent. The $105k additional over 20 years is just a little over $100/month or about 2.5%. Not sure level of accuracy you are shooting for – I do appreciate your concern about too many variables.

Thanks! I am using 4013 (which is down $35 from prior year estimate, BTW). I do have a small increased spend, but not much. Probably handled by SS COLA. Extra unspent doesn't impact RMD (which I calculated) as my WD will exceed the RMD amount.

My calc's show front loading nets higher total $'s in the end. Not sure where the extra $105k number you refer to comes from? In my calculations I am showing the extra growth from not taking additional WD's (only for the 3 1/2 years for the case of 63 + 6mos start, much more than $105k total, but even assuming your number, that is the increase in $'s from starting at 63 + 6 most and not waiting to FRA at 67. CPI or inflation would come off of each of those, so.... Hopefully this helps?

Flieger

 

[all4j]

Not sure where the extra $105k number you refer to comes from? In my calculations
Hopefully this helps?

Flieger

Thanks, it did help. I’m still not exactly clear, but think I get your thinking enough to recognize we’re just in different circumstances. I may also be misinterpreting your data. I was focused on the difference between taking at age 65 vs fra/age 67 – or 2 years. Assuming the other years would have similar results. I was looking at a monthly at age 67 of $4013 vs $3478 at age 65, or $535/month difference. Over the 2 year period, that would be $12840 different; yet I thought you were saying you’d take $66777 additional $s from ira during that period to cover the gap. So, if just looking at age 65 vs 67, I’m unclear on where that added ~$34k is accounted for. It would seem the extra $535/month would reduce the necessary wd, even if above rmd levels.

The $105k (actually $105321.60) number was how I had interpreted the added amount between age 65 & 67 over the 20 year time period.

Appreciate you taking the time to answer my questions, but not sure I need to really dig deeper.

 

[audreyh1]

We have pondered this from time to time. We RE'd at 57/56. Now 66/65. Definitely still Go-Go. Wondering when we will slow down, although we already don't fill travel days as full as we once did. We just got back from an archaeological tour of Mayan cities in Central America. We were the youngest people on the tour. Many in their 70's and 80's. Not all were as energetic as we were, but it was impressive how well they kept up with the active pace and full days.

It can be quite inspiring! We’ve seen this on our group trips, folks traveling through their 70s and even into their 80s

We’re still mostly go-go. DH turned 70 last year on a trip and many laughed at him that he was still a baby, ha ha. He’s very active and in great shape and health () so it’s pretty much as if we both are still 66.

 

[Flieger]

Thanks, it did help. I’m still not exactly clear, but think I get your thinking enough to recognize we’re just in different circumstances. I may also be misinterpreting your data. I was focused on the difference between taking at age 65 vs fra/age 67 – or 2 years. Assuming the other years would have similar results. I was looking at a monthly at age 67 of $4013 vs $3478 at age 65, or $535/month difference. Over the 2 year period, that would be $12840 different; yet I thought you were saying you’d take $66777 additional $s from ira during that period to cover the gap. So, if just looking at age 65 vs 67, I’m unclear on where that added ~$34k is accounted for. It would seem the extra $535/month would reduce the necessary wd, even if above rmd levels.

The $105k (actually $105321.60) number was how I had interpreted the added amount between age 65 & 67 over the 20 year time period.

Appreciate you taking the time to answer my questions, but not sure I need to really dig deeper.

I'll go back and take another look to make sure I didn't (once again) miss something. Stay tuned!

Flieger

 

[Flieger]

Thanks, it did help. I’m still not exactly clear, but think I get your thinking enough to recognize we’re just in different circumstances. I may also be misinterpreting your data. I was focused on the difference between taking at age 65 vs fra/age 67 – or 2 years. Assuming the other years would have similar results. I was looking at a monthly at age 67 of $4013 vs $3478 at age 65, or $535/month difference. Over the 2 year period, that would be $12840 different; yet I thought you were saying you’d take $66777 additional $s from ira during that period to cover the gap. So, if just looking at age 65 vs 67, I’m unclear on where that added ~$34k is accounted for. It would seem the extra $535/month would reduce the necessary wd, even if above rmd levels.

The $105k (actually $105321.60) number was how I had interpreted the added amount between age 65 & 67 over the 20 year time period.

Appreciate you taking the time to answer my questions, but not sure I need to really dig deeper.

Ok. I even have to go back and look at the formula's to remind myself!

These show the difference, 20 years after FRA, based on the amount of SS at each age times the number of years collected (for 65 that is 22 years) as compared to what the SS total would have been at that 20 years. So in the case of 65 vs. 67, that is $963,120 - 918,192 = $44,928.00

Next, I looked at the amount I would collect for the 2, 3, 3 + 9mos or 3 + 6mos. For 65, that would be 2 years at $41,736 = $83,472. To be a little conservative, I said that I would only forego 80% of that amount in my planned WD's that I would have taken if I had NOT started SS. So, $83,472 * 80% = $66,777.60. IOW, I would still WD 83,472 - 66,777.60 = 16,694.4 over that period. Again, just conservatism saying that I would not gain 100% of the benefit of SS in reduced WD's.

The additional growth shown in Post #54 I feel is pretty self explanatory. just remember that I was using the 63 + 6mos age numbers for that, not the 65 age numbers you have been looking at.

Flieger

 

[Flieger]

I've always been of the opinion that something would be done to remedy the SS shortfall, albeit last minute. Recent events have changed my mind on this. It seems that the game of blaming the other side (both sides playing) for others pain is seen as a potent political tool, and apparently is working as we continue to allow it.

Based on this, and looking purely at the numbers, it seems that starting now will effectively give me the largest long term (with the assumptions I have made) benefit, amplified if there is no action taken and a 25%+ cut ensues, so I have decided to pull the trigger. I'll be starting SS at ~63 and 7 months, thereby gaining 3 yrs and 5 months+ (hopefully 5 years unless timing continues to shorten to earlier than 2032?) of SS benefit and subsequently reduced retirement account withdrawals.

Wish me luck!

Flieger

 

[old medic]

Wish me luck!

Good Luck.... A bird in the hand.

 

[Flieger]

Good Luck.... A bird in the hand.

Perfect quote for my thinking!

Flieger

 

[RetireBy90]

I know this is a often discussed topic, perhaps on track with Roth conversions. I also spent lots of time and effort, which I enjoyed, with this question. I also considered things other than the total return question.
I finally decided that for me, the greatest part of FIRE is Financial Independence. Once we passed the FI with cushion I quit quibbling about a few dollars and took my SS before 70. The great part of the FI to me was it didn't make much difference and our FI allowed me to put this question to rest and move on to how to spend this pile we have. Time for me to enjoy it and stop dwelling on a few dollars more.

 

[pb4uski]

I am late to this thread and haven't read all 87 posts, but read some. I think you are way overthinking it.

You can boil the SS delay decision down to buying a COLA-adjusted life SPIA from the US government (which you really can't find in the commercial market place, but bear with me).

Lat's say that your PIA at FRA of 67 is $40,000/yr, so your age 63 benefit would be $30,000/yr. If you defer from 63 to 67, you will forgo receiving $120,000 [$30,000/yr *(67-63)]. In exchange, you will receive $10,000/yr beginning at age 67, COLA adjusted, for life. The simple payback is 12 years ($120,000/$10,000) to age 79 (67+12).

If for some reason you think it unlikely that you will live to 79, then claim at 63.

If a 67 year old paid $120,000 for a SPIA and selected the cash refund option then they would collect $9,180/yr... so not only less than the $10,000/yr received from deferring SS but also without the COLAs... clearly deferring SS is a good way to buy a COLA adjusted deferred life annuity.

Even if you go conservative and increase the forgone SS for interest at 5%, the future value of $2,500/mo for 4 years at 5% per annum is only $132,537, increasing the annual benefit from the fixed benefit SPIA from $9,180/yr to $10,139/yr but the COLA adjustments are the cherry on top and IMO make it worthwhil if you expect average longevity.

For the record, DW claimed at her FRA and I claimed at 70 at which point she received a spousal benefit on top of her benefit based on her own work record since she was a SAHM, so we are collecting the maximum that we could have collected. I expect that we will live well inot our 80s and that one or the other of use will live to early 90s. That was the plan all along.

 

[GenXguy]

Based on this, and looking purely at the numbers, it seems that starting now will effectively give me the largest long term (with the assumptions I have made) benefit, amplified if there is no action taken and a 25%+ cut ensues, so I have decided to pull the trigger.

Yeah, it's best to factor in a 25% haircut across the board. Any way you slice it, there's likely to be a cut.

 

[Flieger]

I am late to this thread and haven't read all 87 posts, but read some. I think you are way overthinking it.

You can boil the SS delay decision down to buying a COLA-adjusted life SPIA from the US government (which you really can't find in the commercial market place, but bear with me).

Lat's say that your PIA at FRA of 67 is $40,000/yr, so your age 63 benefit would be $30,000/yr. If you defer from 63 to 67, you will forgo receiving $120,000 [$30,000/yr *(67-63)]. In exchange, you will receive $10,000/yr beginning at age 67, COLA adjusted, for life. The simple payback is 12 years ($120,000/$10,000) to age 79 (67+12).

If for some reason you think it unlikely that you will live to 79, then claim at 63.

If a 67 year old paid $120,000 for a SPIA and selected the cash refund option then they would collect $9,180/yr... so not only less than the $10,000/yr received from deferring SS but also without the COLAs... clearly deferring SS is a good way to buy a COLA adjusted deferred life annuity.

Even if you go conservative and increase the forgone SS for interest at 5%, the future value of $2,500/mo for 4 years at 5% per annum is only $132,537, increasing the annual benefit from the fixed benefit SPIA from $9,180/yr to $10,139/yr but the COLA adjustments are the cherry on top and IMO make it worthwhil if you expect average longevity.

For the record, DW claimed at her FRA and I claimed at 70 at which point she received a spousal benefit on top of her benefit based on her own work record since she was a SAHM, so we are collecting the maximum that we could have collected. I expect that we will live well inot our 80s and that one or the other of use will live to early 90s. That was the plan all along.

Yes, looking only at the SS, and keeping it simple these numbers all make sense. I am also including the lack of WD's I will have to take and the earnings on that, which adds to the difference (all of the math up thread). As well, factoring in family history, my cancer history, likelihood of congress continuing to fight and blame each other.... It all adds up.

Flieger

 

[old medic]

Perfect quote for my thinking!

I'll allow you to use it.... For a Beer...

 

[Flieger]

I'll allow you to use it.... For a Beer...

Deal!

 

[readthebible]

It's a tie video 62 vs. 70
Tell me what you think.

 

[Flieger]

It's a tie video 62 vs. 70
Tell me what you think.

It's interesting, and kind of solidifies my thinking. I went to the beginning to get some info on the discount rate, and I do think I would go a bit higher, which pushes the "breakeven" further out. Nothing in this changes my mind. Thanks for the post/info!

Flieger

 

[Flieger]

Timely event has further validated my thinking. You just never know if you will possibly be one of the statistics that "helps along SS funding"....

Driving in to work my 4 hr shift at my "fun job" brewery, and my sister (3 1/2 years older and close to 67) calls me and tells me my BIL (2 years older - 65) had a heart attack around 3 AM that morning. They called 911, got him to the hospital and he had just come out from having a stint placed in his 99% blocked LAD (widow maker). Absolutely no pre-warning. He was released last night to go home thank God. Good news is, he has had complete review of his heart and therefore all "situations" are known now!

He is a guy that retired from engineering 5-6 years ago, but has significant land and works it as his passion/hobby (400+ blueberry bushes for U-Pick, and recently working on other areas of the land for other things).

If you have happened across other posts of mine, you may have seen where my BIL, Sister, DW and I have made some trips together (Alaska, and most recently Hawaii), and where I tried to convince them, somewhat and minimally successfully, to BTD a little for that travel. I also within the last year or so shared my life visualization chart with them and it seemed to hit home a little, but I am thinking will much more so now. BIL got a sizable inheritance and also saved well, but remains very guarded in spending.

I'll let some time pass, but will definitely bring this up as we plan our next adventure. Below is the chart I shared with them.

Flieger

 

[Flyfish1]

It's a tie video 62 vs. 70
Tell me what you think.

Thanks it's a good video.
I am still going back and forth on this issue. It's crazy, I just turned 62 last month and can't quite make up my mind yet. I don't need the money and have a probable long life ahead...ya never know know of course. DW will have plenty of assets so survivor benefits are not a big deal.
Claiming would allow us to back off a bit on portfolio withdrawals, which mentally I like that idea. I always want the portfolio to grow..at least I do for now. Seriously don't know what move to make, so I'm procrastinating .

 

[COcheesehead]

Timely event has further validated my thinking. You just never know if you will possibly be one of the statistics that "helps along SS funding"....

Driving in to work my 4 hr shift at my "fun job" brewery, and my sister (3 1/2 years older and close to 67) calls me and tells me my BIL (2 years older - 65) had a heart attack around 3 AM that morning. They called 911, got him to the hospital and he had just come out from having a stint placed in his 99% blocked LAD (widow maker). Absolutely no pre-warning. He was released last night to go home thank God. Good news is, he has had complete review of his heart and therefore all "situations" are known now!

He is a guy that retired from engineering 5-6 years ago, but has significant land and works it as his passion/hobby (400+ blueberry bushes for U-Pick, and recently working on other areas of the land for other things).

If you have happened across other posts of mine, you may have seen where my BIL, Sister, DW and I have made some trips together (Alaska, and most recently Hawaii), and where I tried to convince them, somewhat and minimally successfully, to BTD a little for that travel. I also within the last year or so shared my life visualization chart with them and it seemed to hit home a little, but I am thinking will much more so now. BIL got a sizable inheritance and also saved well, but remains very guarded in spending.

I'll let some time pass, but will definitely bring this up as we plan our next adventure. Below is the chart I shared with them.

Flieger

View attachment 62809

We both took it early. We don’t need it. We get taxed on it. All the reasons to wait…except if you consider the utility of it vs just maximizing your “potential” lifetime return. It’s still COLA adjusted. It reduces your overall withdrawal percentage, but the biggest thing it does, at least for us, is increase the buffer of not thinking much about finances. There’s value in that.
With all that said, we have plenty for LTC and for legacy giving. So getting more later was not attractive to us as getting more income now. Looking back, we’d do it again.
The downside is I don’t like telling people we took it early because their response is always, you should have waited to get more. Which tells me they don’t see life as we do and that’s ok. Our decision was based on our circumstances, experiences and goals.

 

[pb4uski]

It's a tie video 62 vs. 70
Tell me what you think.

I don't see it as a tie. It depends on how long you live.

How lucky do you feel?

 

[Flyfish1]

I don't see it as a tie. It depends on how long you live.

How lucky do you feel?

Well to me that's the crux of this whole decision. The rest of the math seems simple if you knew your expiry date . ChatGPT and GROK both tell me I have a very good chance of making it to 84 or older, IF I adhere to good exercise habits, drink less, etc.. blah, blah, blah...

We both took it early. We don’t need it. We get taxed on it. All the reasons to wait…except if you consider the utility of it vs just maximizing your “potential” lifetime return. It’s still COLA adjusted. It reduces your overall withdrawal percentage, but the biggest thing it does, at least for us, is increase the buffer of not thinking much about finances. There’s value in that.

I get it and I'm still on the fence. I never calculated it in my retirement planning. Less drag on the portfolio would be a good thing - or would I just increase our travel budget with the extra money .

 

[newuser]

This is something I've thought about a great deal and in the end it varies so much with individual circumstances.

We have a very high (85%) of retirement funds in tax-deferred accounts. So high taxes on RMDs are a big consideration. Especially if DH leaves me a widow, which is likely. Right now I'm mostly pulling from IRAs for living expenses (I have a small pension and DH has a low SSDI income) and doing modest Roth conversions. The benefits of waiting for me to claim SS (I was the much higher earning spouse) seem worth it.

1. Lower taxes on lower RMDs
2. Lower taxes due to 15% untaxed higher SS benefit
3. Higher survivor benefit for my DH if I should pass first

It sounds like your tax deferred accounts are a much lower %, which would change the picture significantly.