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For every year that you postpone Social Security benefits, your total Social Security Benefits will increase by 8%
I cut and pasted this from one of the countless articles about the advantages of waiting until you are 70 to collect Social Security.
If someone who did not understand money and retirement would read this, they would assume that their lifetime Social Security income will be at least 64% higher if they wait until they are 70 vs 62 to collect Social Security Benefits.
This is false. What is true is that by waiting until you are seventy to collect, your monthly Social Security Check will be at least 64% higher. What most people don't intellectualize is the reason the SS check is higher if you wait until 70 to collect is that you did not get ninety-six (96) SS checks from 62-70.
If you actually get more Social Security money by waiting till you are 70 is a wild card based on how long you live and what you lost in interest, dividends, and returns by raiding your portfolio to cover your lost money because you waited to collect SS from age 62-70.
There are dozens of threads here about the advantages/disadvantages of delaying. Read through them, and you will gain a much better understanding of the trade-offs involved. Nothing is as simple as these 'countless' articles make them out to be.
There are dozens of threads here about the advantages/disadvantages of delaying. Read through them, and you will gain a much better understanding of the trade-offs involved. Nothing is as simple as these 'countless' articles make them out to be.
My post had nothing to do with another rehash about the pros and cons of collecting early or late. It had to do with misleading articles stating everyone loses 8% a year if they don't wait to collect. People just take that statement at face value and don't think about the missing checks and the costs of raiding your investment accounts and the likelyhood of a real break even date well into your mid 80s.
well the people here certainly know the ramifications of taking it later and what is involved . we have discussed ad nauseam why it is not a 6 or 8% return delaying depending if pre fra or after .
you have missed checks , missed spousal , either not investing the ss money if you don't need it or spending down invested assets if you do and uncapped medicare premiums if not collecting .
this has been beaten to death in discussions here so most regulars are a lot smarter .
My post had nothing to do with another rehash about the pros and cons of collecting early or late. It had to do with misleading articles stating everyone loses 8% a year if they don't wait to collect. People just take that statement at face value and don't think about the missing checks and the costs of raiding your investment accounts and the likelyhood of a real break even date well into your mid 80s.
Sorry -there is very little new under the sun around c-d and the topic of strategizing when to take SS has been dissected many, many times. Please review those. Cut thread.
The way my math works, I'd collect $198,144 between ages 62 and 70 if I started taking Social Security at age 62. I can self-fund $200K. I'd rather have the largest possible Social Security check deferring to age 70 in the event I outlive my savings. I can live pretty well on my age 70 check. My age 62 check would be a real struggle. Health care and housing would chew up most of it.
The way my math works, I'd collect $198,144 between ages 62 and 70 if I started taking Social Security at age 62. I can self-fund $200K. I'd rather have the largest possible Social Security check deferring to age 70 in the event I outlive my savings. I can live pretty well on my age 70 check. My age 62 check would be a real struggle. Health care and housing would chew up most of it.
By self-funding the $200K you are pulling money out of your investment accounts and due to opportunity costs losing lots of investment income. In other words, by not getting Social Security from age 62-70 you are losing $198,114 that could be spent or saved and losing money.
Here is another way to look at it: You could be investing that $25K every year in a total stock market fund and with a conservative 5% return you would have about $225,000.00. If you would have waited until you are 70 to collect, on your 70th Birthday you would have $0. Sure, your SS checks would be larger starting at 70 but how long will it take to make up for the $225,000.00 that is still growing?
By self-funding the $200K you are pulling money out of your investment accounts and due to opportunity costs losing lots of investment income. In other words, by not getting Social Security from age 62-70 you are losing $198,114 that could be spent or saved and losing money.
Here is another way to look at it: You could be investing that $25K every year in a total stock market fund and with a conservative 5% return you would have about $225,000.00. If you would have waited until you are 70 to collect, on your 70th Birthday you would have $0. Sure, your SS checks would be larger starting at 70 but how long will it take to make up for the $225,000.00 that is still growing?
Another way to look at it is that I'm buying a $20K COLA-protected deferred annuity with tax advantages at age 62 for $198K with the payments spread out over 8 years. My father made it to 85. My mother is 86. I can't buy that annuity privately for that money. It's cheap insurance for "Geoff outlives his savings". I won't be poor living on $43,524 in tax-free 2018 dollars in a paid-for house. I would be struggling with my $24K age 62 Social Security benefit.
I don't think I'm going to run out of money but with some years of hyperinflation and living into my 90's, it could happen. Your "conservative 5% return" doesn't look so great of we have a 10% inflation rate. Remember 1980? Stagflation? Retirees got wiped out. The stock market under-performed the core inflation rate. Interest rates were below the core inflation rate. I'm not trying to maximize my return and die with the biggest pile of money. I'm trying to minimize the risk of being poor. With my age 70 Social Security check, I won't be poor no matter what happens.
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