The age when you actually retire, vs. the age when you begin taking social security

[Texas Proud]

I have not read the whole thread but I think it makes a difference in how many years you have earnings...


Say you only have the minimum of 10 years... I would bet that adding another year or two will make a lot more difference than if you had 30 years of earnings...

 

[Mr._Graybeard]

Being part of a married couple plays into the decision in a major way in terms of survivor benefits so it’s not as simple as your list.

DW was born before Jan. 2, 1954, and I think that is the last date when you could do this (correct me if I'm wrong, SS specialists). Using OpenSocialSecurity.com, we learned that we'd get the best payout if I claimed earlier (I did it on my 67th birthday), enabling DW to claim spousal benefits until she claimed full benefits at 70. We had about equal income during our careers.

Part of the consideration was that actuarially women outlive men, so it especially made sense that she should wait for the maximum monthly benefit.

 

[Mr._Graybeard]

Right, that option ended for people born after Jan. 1, 1954.

 

[Exchme]

Seems to me:

a. If you don't need the SS money soon, but you want to leave more money for heirs, then you may want to take SS early (unless you are confident you'll live to 100 with 30 years collecting SS).

b. If you don't need the SS money soon, and you don't have heir or don't care leaving money for heirs, then use as much your savings as you can first, then live on the max SS startomg at 70 (unless you are in poor health).

c. If you need the SS money for daily expense, then take it soon.

Any faulty reasoning above?

I'll agree with part c in the sense that there is no option, but for a & b, it's not so simple.

You seem to be doing an unfair comparison between the hoped-for risky return of a portfolio and the inflation-adjusted, lifetime income of SS. That is comparing an apple to a zebra. A better comparison is that the person claiming early could have bought a TIPS ladder from age 70 and later with the early SS funds and gotten about the same portfolio riskiness as the person who deferred. That's why opensocialsecurity.com uses the return on long TIPS as the basis for the present value for comparing claim ages. Alternatively, the person deferring could spend down TIPS to live on while deferring and then have a higher stock allocation after claiming and still have the same risk as the early claimer, since more income is guaranteed for the deferrer.

The claim age math is obviously slightly different for males vs. females and of course the math is very different if you have a known health condition that could shorten your life.

The math for married couples is very different than singles. The lower earner is slightly incentivized to claim early as that benefit disappears with the first to pass and the higher earner is incentivized to claim later as that lasts as long as the longest lived.

Because of the actuarial adjustment to SS, non-SS factors like making room in low brackets for Roth Conversions or controlling income for ACA premium credits may vastly outweigh the difference in results due to the SS claim date decision so ACA and Roth should be decided on first and SS worked in around that.

 

[Koolau]

I retired at 57 and start Soc Sec next month when I turn 70. Still can’t believe I’ll be getting a significant check, with COLA, for the rest of my life. Then DW two years later.

Not the right choice for everyone, but with extreme longevity in my family, odds are the best choice for me. Waiting has made larger Roth conversions possible as well.

Heh, heh, just remember that rogue buses or run-away Audis don't care about your family longevity. Look both ways before crossing the street. Honestly, I thought about stuff like this when deciding to wait for SS until 70. I looked up the stats on fatal accidents for folks my age. Don't recall the results but I do know we get more vulnerable (though more experienced) about accidents as we age. Here in Paradise, we lose a lot of Kupuna (elderly) to pedestrian accidents each year. I actually factored that into my decision (but I DID wait.) Hoping it pays off for both of us.

 

[Midpack]

Heh, heh, just remember that rogue buses or run-away Audis don't care about your family longevity. Look both ways before crossing the street. Honestly, I thought about stuff like this when deciding to wait for SS until 70. I looked up the stats on fatal accidents for folks my age. Don't recall the results but I do know we get more vulnerable (though more experienced) about accidents as we age. Here in Paradise, we lose a lot of Kupuna (elderly) to pedestrian accidents each year. I actually factored that into my decision (but I DID wait.) Hoping it pays off for both of us.

Of course it would be statistically foolish to factor "rogue buses or run-away Audis" into a Social Security claiming age decision. You have a 1.6% chance of being in an accident to begin with, with a 0.7% chance of it being fatal, and only 19% of those fatalities are pedestrians in traffic. So a 0.002% chance...or 1 in 47,000.

In 2020, Americans had a 1 in 63 chance of getting in a car accident.

There are nearly 43,000 fatal crashes a year in the U.S., but there’s at least a glimmer of hope: The actual deadly car crash rate is less than 1%. Let’s dive into the numbers:

In 2021, there were an estimated 6,102,936 police-reported vehicle accidents in the United States. Of those, 39,508 were fatal. That makes the effective deadly car crash death rate 0.7% — and more positively, the percentage of car crashes not resulting in fatalities 99.3%.

The National Center for Health Statistics (NCHS) estimates 9,188 pedestrians died in traffic or non-traffic incidents in 2022. Non-traffic incidents occur on non-traffic ways such as driveways, parking lots, or other private property. The latest data from the National Highway Traffic Safety Administration (NHTSA) estimates that, in 2022, 7,522 pedestrians died in traffic crashes occurring on public roads.