It does make sense to know someone’s financial picture to decide all this. For example, if you don’t take SS right away and delay, are you living off of savings that are outside a retirement vehicle or are you drawing down on IRAs, pension, 401K? Do your non-SS assets meet the needs over your life expectancy? Etc. I don’t think you can really decide all that in a vacuum of information.
Some people have a pension and can delay SS. However other assets can be passed on for inheritance, where SS and Pensions cannot.
Many really want to know how much they need to build up to retire and not run out of money. Certainly health issues and not having any long term care coverage can also drain retirement rather quickly.
The Social Security breakeven points are typically calculated without considering interest rates or taxes. It’s simply if you start a lower benefit at 62, or a higher benefit at age 70 (or whenever), when will your total amount received be the same.
I have built a spreadsheet that calculates this. It is really a simple and crude calculation. For example, you just start a monthly $1000 benefit at age 62 and add that continuously, and compare it to a higher benefit, say $1300, starting at age 70. I paid the $40 for Maximize your Social Security and their program does the same thing. Their results match mine. One interesting thing: If you assume that you can actually earn something on the benefits you receive earlier, it does push out the breakeven point. You do NOT need to earn 8% annually to come out ahead. Having your delayed benefit increase 8% annually is not the same as earning 8% on money received. I don’t remember the exact results, but earning 4% on benefits received pushed the breakeven out well into the late 90s, and if you can earn 6% on benefits received at age 62 you would never catch up taking a delayed benefit at age 70. But this analysis doesn’t include taxes and a few other things you need to think about. I am probably going to wait until 70, but have my wife start her’s at 66+. Maximize your SS recommends we both wait until 70 but the breakeven is around age 90 and I would just like to have some benefits sooner.
The guy who gave the presentation claimed that SS will be fully solvent for at least the next 20 years. Here’s an interesting article on it from SSA.gov https://www.ssa.gov/policy/docs/ssb/v70n3/v70n3p111.html
What really bothered me was that we told this guy we were capable of funding our retirement from savings/IRAs/Roths and planned to use the tax free funds first, and were ONLY interested in the Social security analysis as presented in his talk on maximizing the benefits. He insisted he needed all our financials to do that. Um, NO he does not. I felt like I wanted to wash my hands after talking to him. He presented himself as representing/working a tax free 501c 3 non profit but refused to do what he offered at the presentation. Buh- bye.
Funny, I was just on a dementia site that recommended that as the top pick.
None of the ‘free’ presentations are truly free, at the very least you’ve given your time, the least they could do it give yo the info; it’s like the time share presentations where you want the free TV and stay so you listen to their presentation. Fair trade, because some sucker is going to take the deal. I don’t know, I just see the guys who do these free presentations as sleazy.
He was speaking as a member of this non profit and all members donate their time (haha, baloney).
If the free advice presentation includes a “free” dinner, that is a dead giveaway that there will be someone soliciting business at the end.
Heck, anything they have “free” presentations, I’d be expecting some soliciting. Someone is paying for the venue and anything served to those attending. I have rarely attended any and now won’t bother as I can find more productive things to do.
The venue was a library. And there were no refreshments. This wasn’t the typical “free dinner at a nice restaurant” pitch.
Ok. The rental fees at libraries tends to be more modest, but there often still is one of say $10-100/use, at least in our state.
It does sound icky when they insist they need details you aren’t interested in providing. I’m glad you declined to be pushed into revealing them.
Hmmm. What MaximizeMySocialSecurity doesn’t account for is the scenario of being already retired and drawing down IRA funds while delaying SS .
Am I missing something?
you probably have to go to one of the more expensive programs for that scenario.
https://economicsecurityplanning.com/esplanner-maxifi-comparison
Thanks
Cash is fungible. $10k from SS or $10k from retirement funds is the same, depending on taxes.
Many do suggest drawing early, but for many, that is (mathematically) the wrong strategy.
I reiterate my opinion. When investing the early benefits is taken into the consideration, the financial benefits of early or late start is not a clear cut. One may give a minuscule advantage over the other but not enough to spend money to find out, even $40 is too much imo for a mumbo jumbo calculation.
"One may give a minuscule advantage over the other but not enough to spend money to find out, even $40 is too much imo for a mumbo jumbo calculation. "
@Iglooo
is getting $125,000 more over the next 30+ years enough to justify spending $40?
I certainly think so. thats the difference in SS benefits we will both receive by my retiring this year at 66, my hubby receiving spousal benefits for my work for 4 years, then receives his full retirement benefits at age 70, over both of us waiting 4 more years to retire at age 70.
I would not have had access to those calculations if I did not spend the $40.
well, worth it, imho.
We have had an extraordinary decade of investment returns. Let’s not forget that there are no guarantees for the next decade. Come what may, I consider the markets a greater gamble than SS.
We had some non-traditional circumstances (a very old father to two young kids :), a younger mother with good earnings :), etc.), but MaximizeMySocialSecurity was helpful.
I am not confident about my ability to earn 8% per year regularly on my investments. Currently, I plan to wait until I’m 70 to claim SS. H isn’t entitled to any SS and if he were it would be offset by his govt pension which is much higher than my SS.
When I reach FRA, I will see if I still want to wait until age 70. I’m some years from that, so things may still change between now and then.
I think the vast majority of people who take SS at 62, take it because they need the money to live on. So it’s not a question of “what kind of return could you get investing it”, it’s a question of “where do you get the money to replace the SS you are investing”. You will have to pull it from your own assets, which makes it a wash.
Now if you are in the fortunate circumstance where you don’t need the SS to live on, sure, pick an after-inflation rate of return (remember that SS is adjusted for inflation every year) and run the numbers. If you come out way ahead then go for the early file.
There used to be an option where you could file early, and then at some point years later you could bump up your payment by paying back all your benefits. So you could have your cake at eat it too - an interest-free loan to invest, and higher payments. Sadly this option is now only available in the first 12 months after you file.