One thing about delaying, is if one’s portfolio is doing well, you can continue postponing SS and get that guaranteed increase. But if markets perform poorly or you end up living too frugally because you worry about finances, then you can start taking SS at any time. If you claim at 62, you’re locked into those lower monthly payouts. I’m retired in my 50s (currently with a part-time job) but I’ll see how things go for when to claim SS - probably at 65 or 67. I appreciate you talking about the psychological aspect.

Examples always have a pension or $1.2 million dollars. Not applicable to most people unfortunately ( according to statistics).

In my scenario, I'm planning on working at least until 70 (in technology). I'm mid-60s now, and am playing retirement savings catch up. For me, I want the higher SS income. My family on both sides lives to late 80s early 90s. If you take SS later, the yearly cost of living percentage increases will be more dollar-wise, because the base starting SS amount is higher. 2% of 1,000 versus 2% of 1,500 as an example. Everyone is different

Why would anyone care if their withdrawal rate at age 92 is over 5%? Might have to cut back during those 105-110 years?

Three risks that are difficult for a retiree to overcome: 1. Inflation risk 2. Longevity risk. 3. Market risk. All three are mitigated by delaying SS. Sequence of return risk can be managed by making that SS delay a dynamic decision.

This is a high-level analysis of social security claiming age that just got you a new subscriber.... Finally someone echoing exactly how I feel about social security, taking it at 62 and the time value of money! Thank you!

My wife didn’t claim social security until 70 because she didn’t need the money and a guaranteed 8% return was too good to be true. Also her family lives well beyond 84 (the break even point) and she appears to hold those longevity genes. She’s 74 and takes no medications. We also rolled over 175k from a rollover account to a Roth at a 12% tax rate because not claiming social security kept the tax rates low.

Sequence of returns risk is so important to take into account, as it is the biggest risk early on in retirement. I have never heard anyone else include that in a discussion of when to start social security benefits. Well done.

I am deferring for the following reasons 1. Maximum survivor benefit 2. Maximize income where 15% is not federally taxed and zero state tax. Overall 10% less tax vs IRA withdrawals. 3. Inflation insurance with larger COLA. 4. Reduce RMDs by allowing IRA withdrawals without IRMAA surcharge

Wow, I never thought of it this but it makes perfect sense. The middle road on this is to work part time until 70 but then Jane wouldn't be retiring....

Thanks again, Eric, for addressing these more complex financial areas typically not seen on KZfaq. I appreciate you upgrading our understanding of these complex issues, and I will have to watch a few more times to fully comprehend and review the transcripts but still in deep gratitude.

Thanks for your content.

This was very well thought out and presented. I appreciate the graphs and tables. Gave me a lot of food for thought as I am debating the exact same thing. New subscriber here. Thanks!

Thanks Eric for another very informative video!

Great video! I’m glad that you included the psychological aspect in the decision making process.

Ya I get teary-eyed each month when I get my $4,600 social security check. Maybe you should talk about how much more secure people feel when they have guaranteed income. Can’t put #s on that one…

By taking SS at 62 instead of 67, that's $$ one *doesn't* have to take out of one's IRA, thus the IRA $$ can grow tax-free. Win #1. If the IRA $$ not taken out grows at a mere 5%, the break-even isn't until age *87* (rather than the typical "76" cited). (The break-even between 62 & 70 is age 91.) At 6%, between 62 & 67, it's age 93. At 7% I'll be long dead. I'll take my chances. Win #2. Only 85% of the social security $$ are taxed for most. Could be less for some. And SS isn't taxed in most states (including mine). As compared to IRA withdrawals being 100% taxed at the Federal level and by most states in a reduced form. Win #3 for fed taxes in the early retirement years, bonus for state taxes. Since my taxable income is thus less, it gives one a little more $$ leeway for the Roth conversion. Win #4. IRMAA isn't affected, as the MAGI is the same. Draw. SS will need some changes by 2033 to remain solvent. I'll take the bird in the hand, thanks. Theoretical Win #5. The big one: As Peak Financial points out, taking less money out of the IRA *especially* early in retirement, solves the Bengen 4%/guardrails rules in spades. HUGE Win #6. As long as my spouse waits until 67 to take the spousal benefit, it's still half of what I *would* have received at 67. My taking early doesn't affect the spousal benefit. Semi-win, perhaps call it a draw at best. Present day $$ are worth more than future $$. Win #7. Bonus: Theoretical lost opportunity cost in one's early retirement years. Only "loss" I can find is the survivor's benefit is lower. The wins outweigh that my a *lot* of $$ in my estimation, unless one dies in their early 60s. But the $$ saved tax-wise, Roth-wise, risk-wise, growth-wise, seem to outweigh this in my estimation. Am I missing anything? At worst, as a compromise, one can evaluate the financial landscape while in retirement and if growth is good at age 62, wait. If market is tanking, then take SS. Re-evaluate every 6 months or so. This can manage & mitigate the sequence of returns risk as it occurs. Great video.

Great Video!

Had cancer at 37, had neurological issues at 30. I’m taking SS at 62-65. I’m one of those that pay max SS so that 10% bend point screws me. I’m still working so I’m 7 years away at the minimum.

Excellent video, many good concepts. This is a very multifactorial decision, for some is it obvious and easy, others it will be a "best bet" based on longevity Thanks for posting..

Great information

Eric, why do I have to think about SS timing when I have PENSION or $1million or BOTH? Could you please be more realistic... Lets say... NO pension and $500k in 401K. What do I do? 62? 65? 67? or 70? Thank you.

Well said !

I will be 51 next month and plan to retire the year I turn 55 and take advantage the IRS “rule of 55”. My 401k will be sufficient to cover all my expenses. I won’t need SS but I’ll take it at 62 and invest it. I understand that others are deferring their SS to take advantage of the 8% bump each year but unfortunately even though I’m in relatively good health my genes don’t have me hitting 80 years old. I’m gonna do my best to be record breaker though! 😂 But yeah, I’m all for taking SS as early as possible because no one knows how many years you got left and I can pass on my invested SS checks to my kids. I wish you all the luck in whatever retirement plans you have. 👍🏽

Good video and information. However, would appreciate more on over-all tax implications, potential increased costs of Medicare, impact on ability to maximize Roth conversations by taking it earlier, and how analysis might change if married? TIA.

Also consider things such as the cost of travel increasing much faster than the general rate of inflation, and it makes even more sense to "front load" experiences with present day dollars.

Returns raise your income ceiling, SS raises the floor. I'm going to pull at 70 unless something bad happens. My taxes will go towards roth conversions up to that point.

Waiting till 70 (which I did) made sense for me since I could easily afford to be without until I started collecting. I did not have to rely on my retirement assets at sll, since I was working till 70, had a pension that I collected since I was 62, have rental income, and was able to collect an extra 50% of my husband's SS (from my FRA to age 70, a loophole SS has closed for those born after 1954). This was the best decision, I get SS of $4,000 each month, and the COLA increases are larger of course. I anticipate to live to my 90s, as have the women in my family, so this makes sense. I hope to never have to touch my retirement accounts, but roll over my RMDs into an investment account. From my regular income I can even contribute each month to my investments, and pay the taxes on the RMDs

FYI If you file for SS early you can suspend SS once you hit FRA and thus earn delayed retirement credits until you restart it or reach age 70. Many people think that this option is no longer available but it in fact is available. It’s in the POMS. And I actually did this in 2022.

The whole discussion around experiences was moot, since in all scenarios you had her retiring at 62 with the same experiences. Interesting that you would contradict your financial software. Given that her withdrawal rate was only a little over 5% if she waited to claim until 70 (which most CFPs seem to think is a fine rate during go-go years). It would have been an easier sell to plan on taking it at 70, but then adjust if the market lost more than x%, versus just arbitrarily taking the less likely to succeed scenario - according to your software.

Disappointing that the tax consequences of earlier filing for SSA benefits was not addressed. Higher SSA benefits (from claiming later) will lower our tax rates in perpetuity. I think that's a major factor to consider in this evaluation...

😮We both took SS at FRA , me 66 and my wife 67. It was a calculation based with other assets. I recommend that people do a little study, and then take the benefit when it suits them best. Some people worry about leaving money on the table. But optimum is to make a choice and then live your life. BTW, this was excellent content.

Why I plan on waiting to at least 67 to claim SS: at age 62, I only have 25 years at a job making decent money, insufficient savings, and longevity in my family.

At 62 she will need to be on husbands health insurance bc if not individual health insurance will cost around 2k per mo unless she keeps income low enough to get ACA subsidy -of course no providers take ACA insurance in reality so don’t plan on using until you get on Medicare at age 65 you must consider health insurance in any type of planning

What if you want low income years prior to claiming SS to allow for ACA subsidies, Roth conversions, tax gain harvesting, etc. ? Seems better to wait in these instances.

I'm claiming at 62 to help pay off my house the rest is fluff, if I waited it would put me behind for 4 more years and when you get to felling old 4 years is alot. My advise would be retired as soon as possible if I could wait to collect I'd wait til 66 or 67 but I need it now I start collecting in 5 more months, and I do have a small pention to help get it done

I understand the concept, however, each person's case is unique. What if people simply cannot afford to retire and must continue to work until age 70?

Feels like the kids trying to kick their parents out of the job market. Some people actually love to work, getting great satisfaction from it. Click bait with claim it's worse to take Social Security at 70 than you think, and then create worst case scenario by retiring at 62 and delaying Social Security instead of the most comment method, taking social security at the same time as you retire. Never even considers that some people want to work until 70 or later... as they don't have anything they would rather do if they're not working. Then shows a graphic with a senior using a cane like they are 90+, rather than age 62... which frankly is often in great shape. Strange how all the strategies look at age INSTEAD of number of years worked in relation to anticipated years of retirement. Yet, we all go through the same stages of life: 1) Adolescence - Parents / Guardians fund our childhood 2) Contributor - We work, spend, pay taxes, save for our future, and effectively add value to economic growth 3) Senior - Utilize savings, pay taxes, add fuel to economic growth Social Security creates this age discussion. But, reality is more of a percentages game of how much time is spent in each of the three phases of life. 20/45/20 appears to be the default perspective meaning 20 years of Adolescence, 45 years contributing, and 20 years of retirement... given a lifespan of 85 years. People make adjustments as: * some are late starters, so they have to work to an older age to contribute for the 45 years (or so) * some witness longevity of their ancestors so they add years to the Contributor phase to mitigate risks of running out of funds * some witness ancestors that never or rarely make it into retirement, and so saving is just throwing away money.

My CDs are paying 5%.... That's a decent guaranteed rate until I reach 70. It might even be better than an s+p 500 index fund over 6 years.... it's not guaranteed to outperform the CDs.

I retired at 61. I’m now 65 and waiting for Social Security until age 70. I am spending down my traditional Ira in the mean time. My wife is 11 years younger than I am so my main focus is on seeing that she is provided for after I am gone. And I don’t want her to get caught in the widows tax trap.

I’ve been advised to take Social Security at 70 so that I won’t have taxable income while I gradually convert traditional IRAs to Roth IRA’s. Without taxable income, I can offset the conversion taxes with my standard deduction so that I never actually pay any taxes on the portion of my retirement fund that’s in traditional IRAs. So I’ll actually draw on the Roth IRAs first, unlike the typical scenario, while I convert tax deferred funds to Roth for later and never pay taxes on anything until social security kicks in (assuming I can convert it all before required withdrawals kick in)

What? Don't wait until 70 to take SS? Yes! I can retire sooner.

Those, who do not need social security money till 70, can start getting that money at 62 and invest it on s&p500 or nasdaq 100 index fund or etf, till 70. So, this extra portfolio will be extra income after 70. Social income just starting at 70 would be hard to catch up the combination of the extra portfolio and the social income having started at 62. 😎😎😎

Here is the simple reality: determining the optimum age to claim Social Security requires knowing how long you will live. You can't know this. And as a result, you can't determine the optimum age. All you can do is guess. And your guess is no better than mine. So when you claim to know so much more about this than I, it is abundandly clear that you are full of it. Furthermore, your example of a person retiring at 62 and not claiming Social Security until 70 is the worst case for risk, which you chose deliberately in order to exaggerate this risk to get clicks.

I took it at 66

According to your example you are wrong.

Your break even is way off. My calculation is age 88. That is using a modest 6% investment income.

Is this biased because the CFP ends up making less money as his asset based-fees are lower than taking SS earlier? These decisions are on a case by case basis and not a generalized analysis such as this.

People in different situations need to understand how their personal situation fits into the big picture. I'm planning to balance sequence of return risk in early retirement with minimizing required minimum distributions in the future. There are so many moving parts that may affect your choices. Pensions, qualified charitable distributions, and spousal life expectancy all factor in as well.

Your analysis completely overlooks taxes due under Secure Act 2. !! So tired of all these probability models. What about the risk of 34T national debt?????? Get real! Leo MBA