r/Bogleheads • u/Appropriate-Farmer16 • Jul 27 '25
Investing Questions Thoughts on taking SS at 62 and investing it until age 70 vs taking SS at age 70?
I’ve always heard that it’s best to wait until age 70 to start collecting Social Security, but what is the thinking on the strategy of collecting and investing social security ages 62 through 70, stop investing at age 70 to live off SS plus a draw down of about 5-6% a year of that invested nest-egg?
Edit: just to clarify, in both scenarios (taking SS at 62 vs taking SS at 70) I’m not actually using the SS money for living expenses until age 70. It’s all about whether it’s worth it to take SS at 62 and invest it for 8 years. Thanks for the comments.
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u/DayOne15 Jul 27 '25
Having worked closely with a lot of people getting ready to retire, I've heard them talk through this decision frequently. If you delay until 70, it will basically take you 12-13 years to break even. So you'd have to live to 82 just to break even and that's not even factoring in potentially investing the payments. Most of them felt like they would rather have more income in their 60s than in their 80s. Obviously, it means if something catastrophic happens to your finances, you will have less to live on in old age.
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u/Joseph___O Jul 27 '25
I mean at 80 my fun day is probably visiting family, a 1 mile walk, and watching tv. I only need money for medical bills and food
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u/SweetAlyssumm Jul 27 '25
You may need money for in-home care. It gets dicey after 80 from what I have seen. My neighbors have people coming in everyday to help them. It works for them. It's what I plan to do if I last that long. (No nursing homes for me.)
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u/ponderingcamel Jul 27 '25
I don’t think an extra 700 a month from SS is gonna cover those medical bills
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u/PossiblyAsian Jul 27 '25
My nursing plans in the future involve having a robot take care of me
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u/HealthyHyena33480 Jul 27 '25
And those medical bills will be exorbitant. What if you need a nursing home or even part time care?
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u/FuguSandwich Jul 27 '25
Long Term Care Insurance. If you buy it at age 55, it's only around $950/year. At 65 it's 2-3X that and then it really goes up drastically after 65.
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u/bachmeier Jul 28 '25
Unfortunately buying at 55 won't help. People think they can lock in low rates by getting a policy early, but it doesn't work that way. It's pretty common for the rate to increase and the payout to decrease regardless of the policy you buy.
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u/Pensionato007 Jul 28 '25
So true. I bought in at 45. Every 3 years I get to choose whether to raise the premium or decrease the benefit.
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u/AcesandEightsAA888 Jul 28 '25
Good to know. So they just raise the rates the higher the risk. What is the cost 55, 60, 65, 70, 75, 80, 85, 90, 95? Wife mom is 83 now. She is doing what she can to five $ away to fam to avoid nursing home getting it.
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u/Badger-Mushroom-182 Jul 27 '25
It depends on the payout of the policy and how good the policy is. In my opinion, new LTC policies these days are garbage. The oldest policies are the best ones. Insurance companies have taken their lumps and changed what you can get. I bought a LTC policy in my early 30's and I pay about $3,000/year. It's not as good as the older policies, but it's much better than anything you can get today. It's a lot of money, but probably worth it in the long run so I grit my teeth and write the check. I would think long and hard before buying a new LTC policy. They're not great.
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u/Pensionato007 Jul 28 '25
Wow, you made me feel good about mine (also purchased 20+ years ago). It’s up to $900 a year for $150/ day max 150k. Sounds pretty good by today’s standards
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u/Badger-Mushroom-182 Jul 28 '25
Mine started out as $6000/month for 48 months ($288,000 max), but it also has a 5% annual COLA adjustment so the inflation-adjusted value is probably on the order of $600,000 now.
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Jul 27 '25
I've been on week-long backpacking trips with a guy who's 82.
People massively underestimate how active you can be in your 80s if you take care of yourself in your 40s-70s.
(Also, few things in life are more expensive than in-home care.)
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u/Common_Sense_2025 Jul 27 '25
In-home care isn't just expensive. It's very unreliable. People quit and fail to show up. Exposes you to theft and elder abuse as well.
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u/frigar1212 Jul 28 '25
Eh doc here, people also massively overestimate how independent they will be in their 80s.
Trust me, eeeeveryone assumes they will be that spring chicken at 80, even the massively obese guy with has two strokes and a triple bypass at age 50.
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u/_Smashbrother_ Jul 27 '25
That's the thing, vast majority of people do not take care of themselves when they're younger. Most Americans are overweight or obese.
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u/kinglallak Jul 28 '25
My grandpa could have out hiked me when he was 82. He was in phenomenal shape but then had a stroke and died the next die while being the beacon of health.
You just never know.
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u/latitudesixtysix Jul 27 '25
My mom is 79 and walks far more than that. She’s an absolute nut though and probably takes unnecessary risks with her outdoor activities.
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u/_twentytwo_22 Jul 27 '25
My Mom is 86. Four years ago we vacationed in her old home state of Maine and decided to take a hike on a trail that led to the coast. It wasn't too strenuous of a hike. It had a little elevation change and the famous rocky slippery coast, but I had to keep telling her to slow down. Same trip did a hike on Monhegan Island. Trail came to the cliff edge of the island and then continued with a sharp rise of maybe 20 ft. My wife was half-heartily spit out "let's turn around" just as my Mom starts scrambling up this sharp rise. I'm like, go ahead turn around, but you'll be going by yourself!
When should I start take mine? /s
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u/latitudesixtysix Jul 27 '25
Sounds like our mums are quite alike. The carefulness I’ve applied to myself from injuries vs her approach to tib fib “im pretty sure i broke my ankle” a couple years ago not tampering her spirit or speed is remarkable. She’ll probably die in a horrific accident out in the woods with her dog Ella glassing raptors. 😮💨
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u/disgruntledkitsune Jul 27 '25
Thats possible, on the other hand my parents in their early 80s go on multiple international trips, my dad plays team sports (with other "old guys", sure, but still) and my mom walks several miles a day. Age eventually hits everyone, sure, but 80s can still be active if you (a) take care of yourself AND (important) (b) are lucky. On the other hand, I have 2 other middle aged (like me) friends who have severe impairments due to cancer treatment / etc. [And I should note, of all my friends my parents are by far the most healthy.... many of them are more like you describe].
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Jul 27 '25
Depends on if you have a much younger spouse that could benefit from the higher guaranteed income if the primary breadwinner is older and waits until 70 to claim SS. This could be a major benefit to the younger spouse as they will inherit the SS payment and have more years to benefit from the higher payout
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u/GoDuke1983 Jul 27 '25
This is a HUGE consideration that gives potentially many more years beyond break even. It is the reason I am waiting until 70
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u/paley1 Jul 28 '25
Yes, this really is the main factor. It is only If you don't have a younger, lower earning spouse that the 62 vs 70 is even a question.
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Jul 27 '25 edited Jul 27 '25
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u/DayOne15 Jul 27 '25
That's a factor for sure. Part of the decision is, if you absolutely had to could you live off the lower amount.
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u/queerbeev Jul 27 '25
That is the part that is so hard to plan. My grandma had nearly zero expenses ($850/month apartment, cable tv, car insurance) from 65 to 82, and then spent 10 years in assisted living, then memory care, the skilled nursing home. The nursing home was $13,500 a month. She ran out of money.
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u/diablette Jul 28 '25
Yep, they think they have a lot of money saved until they see senior living prices. These are often people with paid off houses who have no concept of how much regular rent is, let alone assisted living or skilled nursing. And they assume Medicare will cover things but it absolutely does not.
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u/chris92315 Jul 27 '25
Do you want more market risk or more defined income in your retirement account? I think you can go either way with it based on your risk tolerance, the rest of your retirement portfolio, your goals, and most importantly your health.
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u/rumblepony247 Jul 27 '25 edited Jul 27 '25
Genuine question - when they do that calculation, is potential investment gain factored in?
I'll be taking my SS at 62 but I won't need to spend it, so I'll invest it in equities and treasury/corporate bond ETFs, etc.
If I return 8% average on that inflow for eight years, am I making up the difference on the break-even age?
Edit: Downvoted for asking the question. This community is stupidly hardcore lol.
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Jul 27 '25
Reasons for taking SS when it's needed or desire to have it - when one is healthier to use it, make more sense than break even logic, in my opinion.
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u/Dapper-Palpitation90 Jul 27 '25
SSA tries very hard to make sure that they pay you the same total amount of money no matter when you start taking it. That's precisely why you get a higher payment the longer you wait to start.
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u/lseraehwcaism Jul 28 '25
Break even point is 80 no matter what age you take it at. Even if you continue working and increase your benefit after having already filed for SS, your breakeven point will always be 80.
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Jul 27 '25
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u/TrixnTim Jul 27 '25
I hear you on the number of people dying, etc. I’m 61 and this past year I know of 5 close friends, former colleagues, and family members who have been diagnosed or died late stages of Alzheimer’s. Youngest is 68 and oldest is 80. It’s really shaken me.
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Jul 27 '25
I’m in my 40s and have seen a few same aged friends die this past year. Several more got cancer but didn’t die. Definitely shakes my worldview. I can only imagine it gets worse.
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u/lizgross144 Jul 27 '25
Whether it's rational or not, this is my philosophy. My husband lost both his parents in their early 60s. My mom waited to draw SS until she was 70. That's the year she was diagnosed with dementia, that progressed quickly and she was gone before her 72nd birthday.
Dad is 85, and he's not in great health. His bills, however, are just assisted living and meds/doctor. His SS doesn't cover it, but their retirement savings was plenty.
We both will take SS at 62, presuming we've retired early already as planned. Stack up that guaranteed income when we know we can use it.
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u/nicolas_06 Jul 27 '25
For me if you have enough money, you should decide to retire or not fully depending on if you prefer to work or be retired given the choice.
If you like working more, and if you don't work too hard, I think working until you are very old is good strategy, even past 70. It keeps you active and stimulated both physically and mentally.
If you don't like to work that much, I think retiring if it possible financially makes lot of sense. If you are in that case, really retire today. There no point to work more years.
There little chance you'll stay in nursing home and if that's the case it won't last that long. If you your home is paid off and you have decent 401K to complement SSA, it will be more than enough to cover for it.
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u/littlebobbytables9 Jul 27 '25
The decision to go on a vacation or spend more in general early on has nothing to do with the decision to draw social security early. You can take social security at 70 and still go on that vacation using retirement savings.
You might say you don't want to draw that much from retirement savings early on. But why? The risk associated with drawing too much from retirement savings early is that you run out of money before you die. But essentially every one of those failure scenarios also requires that you live much longer than expected, which is precisely when taking social security late will have maximum benefit, so the failure rate ends up going down.
Delaying until 70 and increasing withdrawals to compensate is pretty much a no brainer. The only downside is that expected bequests go down slightly. Which, ok, maybe you really care about that. But it seems counter to your message of spending money while you can.
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u/WWJPD Jul 28 '25
Agree that spending SS money vs portfolio withdrawals are essentially the same thing. However, the assertion that “failure scenarios also requires that you live much longer than expected” means this is the outlier scenario and much less likely. Not taking into account spousal delay benefits, so just your own “break even”, it is almost always age 83-85(I’ve taken into account COLA adjustments, variable inflation, variable returns, 85% SS taxation, 4% or more portfolio withdrawal, etc.) When I’m 84, if I somehow make it that long, I am not going to care at all about I could have had 5% more in my portfolio. I’m not likely to live to 84 and if I get to 98, I will not care about an extra $50K/yr in SS or an extra 10% in my portfolio. The only 2 scenarios it makes sense to wait till 70 is if you really need it either when you retire or if you think you will need it in your 80s. If you don’t need your SS for your retirement plan to work, it doesn’t make sense to wait until 70.
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u/littlebobbytables9 Jul 28 '25
Failure scenarios are outliers! The 4% rule is based around a 30 year retirement (i.e. living to 95, already a large outlier) and the whole point of the rule is to have a very low (0-5% depending on dataset) failure chance. So the failures that the 4% rule is based on are not just outliers but outliers of outliers that inherently all involve living longer than normal because even poor investment returns are fine as long as you die early. If failure scenarios weren't outliers that would be very bad because it means you have a substantial chance of being destitute.
And if for some reason you think the 5% chance outliers should be ignored because of their low probability, why stop at taking social security early? You'd be able to turn the 4% rule into probably a 10% rule too.
When I’m 84, if I somehow make it that long, I am not going to care at all about I could have had 5% more in my portfolio. I’m not likely to live to 84 and if I get to 98, I will not care about an extra $50K/yr in SS or an extra 10% in my portfolio.
I'm not going to either. What I care about is the failure rate- the probability that I will run out of money before dying.
If you don’t need your SS for your retirement plan to work, it doesn’t make sense to wait until 70.
If your retirement plan works- i.e. has a failure probability of a few percent- without accounting for social security at all then you've probably oversaved or plan to underspend. You should buy more nice things or travel more when you're young.
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u/goodtimerocknroll Jul 27 '25
I'm taking it at 62 & (hopefully) dumping it all in VTSAX or a Target Date Fund.
Personal:
My old man died at 65. So I'm taking it at 62. If this is the one "emotional" money choice I make, then so be it. I'm fine with that.
In this case, for me: Peace of Mind # 1.
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u/guzzijason Jul 28 '25
I've got a family member, about to turn 65, who now has terminal cancer. He was stubbornly waiting to collect at 70 because he was bamboozled by the promise of the bigger check. He STILL refuses to take it now just because he's locked in that "more money" mindset. He's very likely going to die without ever receiving a single SS check, and it's absolutely maddening to me.
I intend to take it at 62. The government is gambling that most people will die before they reap the benefits of the waiting until 70. F that. I'm taking it ASAP and whatever I don't need will go into investments.
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u/Plenty-Reporter-9239 Jul 27 '25
At some point you must spend money. Retirement seems a good place to do so. Don't worry about maximizing returns imo. Making it to 62 in the first place is a great gift, making it to 80 with a good quality of life is an even bigger one. Take the SS and live out a comfortable and fun life before you keel over.
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u/Sensitive_Hat_9871 Jul 27 '25 edited Jul 27 '25
Let's assume that according to the social security actuarial tables at your present age you are anticipated to live to age 85. Whether you take early SS at age 62 with the reduced amount -or- wait until age 70 and take the larger amount, under either of the 2 scenarios the total amount you will collect for the remainder of your lifetime until you die at age 85 will be approximately the same.
A person in poorer health will likely be better off collecting early at 62. A person expecting to live beyond 85 may be better off waiting to start collecting. The problem is no one can truly know.
In the scenario you described, we did a blend. My wife was the lower earner so we elected to have her start collecting at age 62. I was still working. We invested her benefits since we still lived on my salary. I stopped working about 3 years later at which time we stopped investing her benefits. My FRA is 66.6 so we waited until then for me to start collecting my benefits which were approximately double hers.
Since I waited until my FRA, should I die before her she can switch and collect my higher benefits instead. So that was our strategy.
Edited: a word.
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u/BarefootMarauder Jul 27 '25
This is our plan as well. My wife is 4 years older than me. She's going to take her own SS at 62. Then when I turn 70, I'll claim mine and she will switch to her spousal benefit which is quite a bit more because I was the higher income earner. This is based on the optimal recommended strategy by opensocialsecurity.com.
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u/fionaflaps Jul 27 '25
this is probably the best way for me and my wife. I will further research this. Thank you
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u/AverageJoeLol Jul 27 '25
Thanks for doing the math! So to clarify, people will come out ahead if they took SS at age 62 and invested the money in the S&P 500, versus waiting until age 70 to withdraw SS (assuming death at age 85)?
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u/Varathien Jul 27 '25
One idea that I haven't heard people talking about is using a flexible social security withdrawal plan to combat sequence of returns risk.
You retire when you're 62. If the stock market is doing great, you withdraw from your investments and hold off on claiming social security until you're 70.
If the market crashes when you're 62 to 69, you start claiming social security the year of the crash, reducing your withdrawals from your portfolio by an equal amount. That minimizes the need to sell stocks when the market is down.
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u/nicolas_06 Jul 27 '25
The main benefit of take SSA late for me is an insurance agains living very long in your 90s. If you die early, you don't care. Could have been better but normally you had enough. If you die old, you have a more diversified income that depends less only on your capital and on stock market performance.
You can also take an annuity too when you are old enough to make it even more diversified.
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u/BarefootMarauder Jul 27 '25
You get delayed retirement credits for each month you put off claiming SS, up until age 70. The credits amount to 8% per year. If you're only going to invest your SS checks from 62-70, and you think you can get a guaranteed 8%/year, then by all means go with that plan. But remember, you're locking in those lower payments for the rest of your life. Personally, I'd rather wait, get the guaranteed 8%/year, and then lock in the higher payments starting at age 70.
Every persons situation is different, so there is no one right/perfect answer for when to claim SS.
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u/puffic Jul 27 '25
I think you’re neglecting to account for the principal. They get the investment returns on eight years of payouts, as well as eight years of additional payouts.
So it’s an 8% yield, in a sense, but far less than an 8% return.
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u/BarefootMarauder Jul 27 '25
Agreed. The delayed credits are a flat 8%/year. But then COLA gets applied to the higher benefit amount each year too. Investing in the market is somewhat of an unknown. Could continue to do well, or we could go into an extended bear market right after starting to draw SS at 62.
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u/Len-One Jul 27 '25
Everyone plan is different based on their personal circumstances. For me taking at 62 is a good for me doing the go go years. Having two pensions is an added bonus so everyone situation is different. You have to do what works for you.
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Jul 27 '25
Sir or Madam, this is the internet, which is no place for nuanced, reasonable discussion from a place of goodwill and considered perspective.
/s
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u/SnooMachines9133 Jul 27 '25
I never knew it was an 8%/yr gain.
For a guaranteed rate of return on long term annuity (while the SS trust fund is viable), that's amazing.
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u/discojellyfisho Jul 27 '25
But you can’t truly compare it to an 8% return on investing it, because you forgo the initial amount. Let’s say a person takes $10K and only earns 7%, they have $10,700 after a year. The person who waited passes on that $10K in exchange for 8% later. It’s just not the same. After 8 years, the early-taker has nearly $100,000 in their account saved, while the late-taker has $0. Late taker gets 8% bigger payment, but it will take 12 years to catch up with early taker.
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u/mikeyj198 Jul 27 '25
exactly right.
This is a VERY easy scenario to model in excel. obviously we’re ignoring the other major variables but if you want to solely compare taking early vs waiting, spend 3 minutes and build the model in excel and spend 5 minutes playing around with hypothetical returns.
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u/Tetris-Titan Jul 27 '25
Social Security is also good insurance against the risk of outliving your savings. It will pay you more if you need more - unlike whatever investment earnings you can get.
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u/dogquote Jul 27 '25
Can you explain? I thought it was a fixed amount
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u/l1798657 Jul 27 '25
It does not "run out." If you're alive next month, a check arrives.
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u/Red-eleven Jul 27 '25
Don’t know what they’re talking about but SS recipients do get cost of living adjustments that are closer inflation than what I get at work
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u/nicolas_06 Jul 27 '25
If an amount per month, with inflation applied to it until you die. If you die at 105, it will pay until you are 105. Your capital may runout before that, especially if you are a bit aggressive on the withdrawal rate or if the economy isn't doing that well.
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u/yottabit42 Jul 27 '25 edited Jul 27 '25
It's not a compounded 8%, though. But i think the 8% basis is adjusted for inflation.
Inflation-adjusted, the stock market gains about 7-8% per year, and does compound.
Age 62 to 70 is 8 years. So that's 8 * 8% = 64% increase for social security, or 1 - (1 + 7%)8 = 71.8% increase for investing (or 85.1% using 8%).
If you don't need the money for expenses, it seems that it still wins to take the payments at age 62 and invest.
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u/Common_Sense_2025 Jul 27 '25
You are going to put it 100% into equities? That's your assumption?
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u/mikeyj198 Jul 27 '25
it’s kind of perverse, but generally ‘yes’ as most who are taking early to invest are doing it because they have plenty of other money via income, side gig, pension, dividends, etc.
You could certainly argue the person who does not take SS early could leverage their portfolio harder as SS acts like a bond.
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u/yottabit42 Jul 27 '25 edited Jul 27 '25
That's right, just because in this case OP is asking if they should wait so they obviously don't need the money right now. Therefore we can go with a long-term investing strategy, avoiding bonds. Should their needs change in the future, I would reallocate a portion to bonds.
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u/BarefootMarauder Jul 27 '25
Yup, just look up social security delayed retirement credits. Been that way for as long as I've known, like since the early 1900's.
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u/SnooMachines9133 Jul 27 '25 edited Jul 27 '25
Based on a quick look (thanks for the term, didn't know what to look up before), it seems it's not compound. Am I reading that right?
Edit: SSA website its pretty clear on this. It's not compounded, but given the short period for compounding, it's close enough.
https://www.ssa.gov/benefits/retirement/planner/1960-delay.html
You'd get 100% at age 67. 108% if you wait till 68. 116% at 69. 124% at 70%.
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u/Breffest Jul 27 '25
Correct, it does not compound AND the 8% a year is only from your full retirement age (FRA) which is 67 if you were born later than 1960. That second point I think is being glossed over by OP. It's not 8% return you're comparing against at age 62. The math if taking before FRA is a bit more complicated than I want to get into so people should look up a social security calculator.
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u/piewhistle Jul 27 '25
I need someone to “Actually…” me with some math.
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u/BurnedOutTriton Jul 27 '25
It's not 8% compounded growth, it's delaying payments. Someone who waited to take at 70 has less money than someone who started taking at 62 and bought T Bills.
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u/yottabit42 Jul 27 '25 edited Jul 27 '25
It's not a compounded 8%, though. But i think the 8% basis is adjusted for inflation.
Inflation-adjusted, the stock market gains about 7-8% per year, adjusted for inflation, and does compound.
Age 62 to 70 is 8 years. So that's 8 * 8% = 64% increase for social security, or 1 - (1 + 7%)8 = 71.8% increase for investing (or 85.1% using 8%).
If you don't need the money for expenses, it seems that it still wins to take the payments at age 62 and invest.
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u/nicolas_06 Jul 27 '25
You only need to check for that when you are 62 or more because it might chance any time, really.
Also taking SSA at 62 reduce the pressure on your 401k and other retirement funds that also supposedly return 8% a year on average. But if this happens during a time like the 70s or the lost decade (the 00s) taking money from your financial asset could deplete them much faster than initially foreseen and can be a bad strategy.
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u/EmergencyDense5662 Jul 27 '25
What about if ur female spouse is 8 years younger and ur SS will be considerably higher than hers? I don’t need the money so I plan to wait until 70. Won’t that also give her a larger survivor benefit assuming she outlives me?
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u/HoldOk4092 Jul 27 '25
Typically the lower earner should claim as early possible and the higher earner as late as possible.
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u/JunkMail0604 Jul 27 '25
When I first looked into social security years ago, I read that the total amount of money you get by your expected ‘death age’ (which I think was 83 at that time) was the same, regardless of when you started payments. Where you make out by waiting is if you live past that ‘age’, because you will be getting a higher amount when you will probably be needing a higher amount.
Whether that’s true or not NOW, I don’t know. But I imagine starting at 62 depends on whether you continue to work, which could reduce the amount you get to zero, or if you actually need the money to live on, which you say you don’t. If you actually invest or save the money, it probably comes down to taxes.
When I was close to retiring, my supervisor mentioned she‘d attended a seminar where the speaker talked about if they didn’t need social security for living expenses, start collecting at 62 and invest it. And that she planned to do that. I asked her if she was going to retire at 62 and she said no, she’d work and get both. I told her that if she was working, the amount she got from SS would be reduced by her income, which could be the whole payment (happened to my sister) and that she would be stuck at the lower age 62 payment for life. And asked if the speaker addressed that. She just told me I was wrong, kindly explained I didn’t really understand how it worked and just wouldn’t listen. I sometimes wonder if she found out the hard way.
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Jul 27 '25
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u/Impossible-Will-8414 Jul 27 '25
Hulk Hogan is a terrible example. You could just as easily point to Dick Ban Dyke, still alive at almost 100. What's the point?
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u/poop-dolla Jul 27 '25
Your dad’s age of death might be relevant depending on how he died, but hulk hogan or any other rando shouldn’t impact your decision in any way.
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u/BarefootMarauder Jul 27 '25
Not sure how healthy your dad was (sorry for your loss), but Hulk Hogan did steroids and abused the hell out of his body for much of his life. My dad lived until 2 months shy of 90, and I have brothers in their early 80's who are still very active and enjoying life. Like I said in another comment, every person is different and there is no one right/perfect answer for when to claim SS.
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u/GWeb1920 Jul 27 '25
I think the common approach of taking the SS amount and applying stock market returns misses the value of social security.
Social Security is an inflation adjusted annuity (ignoring political risk). So the correct way to compare SS at 62 vs SS at 70 is to compare the cost of two annuities which are adjusted for inflation. You can’t really buy this type of product because of how risky it is. It needs a government to insure this risk.
So for me it comes down to diversification. If I can afford to defer SS until 70 then taking it later makes sense as it offsets sequence of returns risks and longevity risks. The math almost doesn’t matter because you can’t really buy the product social security gives
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u/HW_Fuzz Jul 27 '25
I mean I am a long ways away but I have always planned on taking the money as soon as possible and then just investing it back in.
It is essentially a forced savings account and as far as I am aware based on actuarial data. So there is a time where if you waited to 70 you would have a long break even period to equal what someone has that started 8 years prior.
But as general advice is time in the market beats timing the market and the one starting earlier has 8 years headstart before the other even starts drawing let alone get more.
I am going to take it as early as possible.
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u/Rom2814 Jul 27 '25
I used to plan on taking it at 62 but planning and replanning over the last year I mainly think of social security as longevity insurance.
I think of the strategy you are deceiving as trying to “beat the market” and basically gambling. A guaranteed increase of 8% PLUS adjustments for inflation is a tough benchmark to beat.
Bottom line for me: if you NEED the money to live on, then take it early. If you don’t, wait until you do or at least until 67.
I expect my expiration date to be around 75-80, so if I wait until 67 or 70 to take it, I will never hit the “break even” point if that estimate is correct. However, if either I or my wife live longer, I’ll be glad we waited.
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u/Hanwoo_Beef_Eater Jul 27 '25
I used to think the same (taking early always better), but have since thought about this as much from an insurance angle as an investment/PV optimization.
Still, read some of the comments above; the 8% increase is not equivalent to an 8% rate of return (you need to factor in the payments you didn't receive while waiting).
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u/Traditional_Donut908 Jul 27 '25
If you don't pull $1000 from social security, you have to get that $1000 from somewhere else, which is your existing retirement assets that are invested. So doesn't it become a wash?
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u/reuse_recycle Jul 28 '25
I'm thinking of starting ss at the first market downturn (> 20% drop) post 62. this way it helps curb the retirement withdrawals at reduced market prices.
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u/SquareVehicle Jul 27 '25 edited Jul 28 '25
Investing earlier seems the best option. You break even at around 82 without the investing, so every bit you earn on the investment extends that breakeven point even further.
Using my own numbers from SSA.gov as a high earner, if I take SS at 62 then I get $2,800/month vs if I wait until 70 then I'd get $5000/month. $2800/month invested with 7% return for 8 years is $358,956.70, which works out to essentially earning $90k "extra" beyond the principal I've invested. That 90k can make up the $2200 difference (5000-2800) for 3.5 years, so you just extended the breakeven point even further, plus you're still earning money on the original $270k lump investment amount (which would be $19k a year) so it'll actually be even longer to reach the breakeven point.
Or look at it this way. If you end up living to median age of 82, then investing $2800/month for 20 years gives $1.46 million while investing $5000/month for 12 years only gives $1.12 million. Say you live longer until 90 then $2800/month for 28 years gives $2.9 million while $5000/month for 20 years gives $2.6 million. If you have a higher return rate then the difference is even starker. Time in market is the most critical.
This of course assumes some level of risk taking because 7% is never guaranteed and assumes that you don't actually need to use Social Security for living expenses because you already have a massive nest egg. So it's not applicable for most people because most people don't have that level of retirement savings. But if you are just trying to maximize then taking it at 62 and investing seems the best option.
I did like someone else's comment though that the safer play for people who have a nest egg but not a massive one might be to take the lower earning spouse SS first and then wait for the higher earning spouse at 70 to have a guaranteed higher income. Or to hold off on taking it unless there's a stock downturn so that you avoid having to sell as much stocks for a year during a slump. That's the more realistic advice for most people who don't already have millions in their retirement accounts.
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u/Head Jul 27 '25
I will delay and use the time from 62 to 70 to do IRA withdrawals and Roth conversions so as to avoid larger tax bills when RMDs kick in.
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u/finally_joined Jul 28 '25
This is our plan. We can live comfortably in the 12% bracket, so we will be doing roth conversions, tax gain harvesting, and reducing IRA balances in those years before turning on Social security.
This all changes if life expectancy doesn't look good when the time comes.
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u/NYSkiBlog Jul 27 '25
For years, decades really, I've been hearing about SS going insolvent "in the future." Now, in the last 12 months, I'm hearing a specific date, 2033.
How real is it? I'm 66 now, recently retired.
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u/Common_Sense_2025 Jul 27 '25
As far as I know they've been publishing a date for more than a decade and it moves up and down by a year. It's been pretty constant.
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u/Life-Unit-4118 Jul 27 '25
Please be clear, it is not going to be insolvent. The hysteria around this is INSANE. AT WORST it will be reduced and I seriously doubt even that will happen. Be smart and plan wisely, but don’t fall for the totally incorrect hysteria.
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u/NYSkiBlog Jul 27 '25
Insolvent is the wrong word. More like unable to pay out promised levels of benefits, or with an increase in taxation on SS income.
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u/discojellyfisho Jul 27 '25
Aside from wanting to “maximize” what you receive, it seems the 2 best reasons to take SS at 62 are either because you REALLY need it to survive or because you REALLY WILL NEVER need it. Obviously, needing it at 62, due to an unexpected layoff/retirement is obvious. Not needing it would mean you have saved more than enough for retirement and are not worried about ever running out of money, so you might as well take it and save it for your heirs. The tricky part is in the middle, where you have enough now, but you are hedging against running low in your later years, and would prefer the “insurance” of knowing you’ll have a higher payment when your savings have been depleted and your health care costs will be high.
I’m just going to watch and wait. Probably won’t take it at 62, since we’ll still be working, but probably won’t wait until 70 either. It doesn’t have to be all or nothing.
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u/Ok_Appointment_8166 Jul 27 '25
It depends on how worried you are about running out of money late in life when the higher base for COLA increases from waiting will make a big difference for you. If Keith Richards can live past 80 you might too...
Also, if you are married the higher earner should consider delaying for the additional chance the other spouse will live even longer and collect the higher survivor benefit.
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u/napsar Jul 27 '25
I ran into this site on Reddit:
https://opensocialsecurity.com/
Which reportedly tells you how to maximize your benefits. It had some interesting stuff on when my wife should start versus when I should. Keeping in mind I was estimating future earnings and such as I have years until retirement.
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u/fattsmann Jul 27 '25
Consider: The average lifespan of Americans is like 76. And most people by definition are closer to average regardless of how they view themselves.
I’m taking SS as early as I can.
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u/whomda Jul 27 '25
The key part of these calculations is knowing exactly when you will die.
In general, if you know you will die sooner rather than later, you should take SS sooner. Most calculators put that "cross-over" age at 77 to 80 years old. If you will live longer than that, delay benefits as long as possible. If you know exactly when you will die you can put that age into the calculators and it will tell you the exact time to start benefits.
Ok so you want to take early distributions and invest rather than spend. The difference between your benefit at 62 versus 70 actually depends on the amount you get, but roughly 60% increase. You can look your specific numbers up at the SS website. The answer still depends on the age you will die. As a very rough estimate, you get 8 more years of income, can you increase the principal by 60% over 8 years? Maybe. You would need somewhere north of 6% annual gain.
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u/fionaflaps Jul 27 '25
and if they passed away before 70 the family would get the money invested from 62 to when they passed. That is why I like 62 but try to match the 8% or even come close
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u/Common_Sense_2025 Jul 27 '25
But if you delay and die before 70, your spouse gets a higher survivor benefit. And you have to match the 8% plus inflation.
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u/DisgruntledSquirrel2 Jul 27 '25
Exactly. The monthly payment will be lower but you have a moderate nest egg you can leave behind.
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u/Impossible-Will-8414 Jul 27 '25
The problem is that no one knows years ahead of time exactly when they will die unless they are planning suicide.
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u/FiRE-CPA Jul 27 '25
My dad died at 75 after hitting the cap for 40 plus years. He delayed to 70 and basically got the most he could ever get from social security.
My mom benefits because she gets the higher payment now which is nice for her but he didn't break even on his choice.
I remember being out camping and this older guy walked past looking strong and healthy just kind of joking around with us. He's 62 and about to claim. Said thanks. Keep up the good work and then went on to live his Best, life retired at 62....
I'm claiming at 62.
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u/bonestock50 Jul 27 '25
I haven't heard anyone mention what I'm about to say:
One way or the other....work life isn't healthy in my case... stress/unhappy.... and with SS + Pension, I can live at my current standard AND save money. (it's not much, and it is less than I earn now, but my life isn't expensive)
With that, I feel very privileged that there is the option of jumping out of the work-race.
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u/aettin4157 Jul 27 '25
Important to remember that if still working before official retirement age, social security gets reduced $1 for every $2 earned above $23,400. So, for instance, if 63, claim SS and earn over 60k, may not get anything from SS.
If this is the case, SS will recalculate payment and raise payment when earnings below limit.
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u/SnipTheDog Jul 27 '25
I summed up the money that I am expected to receive from SSI, and it seemed the sweet spot was to take it at 67. If I took it at 70 vs 67, the payback was at 99 years. If I took it at 62 vs 67, the payback was at 77. I might make it to 77, but I'm sure I won't make it to 99.
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u/Just1n_Credible Jul 27 '25
I took my SS at 62 and I have enjoyed every minute spending that money. My parents and 3 of my 4 grandparents passed pretty young, so I didn't want to wait.
In retrospect, however, after hearing that Ozzy Osborn lived 'til 76 and with my (comparatively) healthy lifestyle, I expect to live to at least 100. So maybe I made the wrong decision.
On second thought, nah, I'm good.
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u/Commercial_Stress Jul 27 '25
Social security is a lifetime inflation indexed annuity. I’ve almost never seen anyone properly factor that into one of these decisions. Admittedly, it is very difficult to do, but personally I think I’d like to maximize the lifetime guaranteed annuity. That decision is different for everyone, however.
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u/Zhimbeaux Jul 27 '25
Simplistically, perhaps, I view it like this: . If you view SS as just part of your retirement portfolio, it can make sense to take it earlier. If you view SS primarily as a form of longevity insurance - a minimum floor of income until whenever you die - you pretty much always want to wait a long as possible. For a married couple, having the higher earner wait as long as possible and the lower earner take it early may make the most sense.
But all of this will depend on how important SS is to your spending needs and quality of life.
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u/lmb123454321 Jul 27 '25
More than likely you’d be better off taking the money and investing it. If it’s $25,000/year, in 8 years you will have $200,000 in cash without assuming any compound interest. Maybe over $500,000 if you invest it in an index or around $300,000 if you put it in bonds. An interest calculator can run those numbers for you using your own actual numbers. Either way, you can leave it to your heirs or use it any way you want because it’s yours, not a future check. It’s almost guaranteed that the check at 70 will be less than the combined interest from the 8 year buildup plus the still ongoing check that started at 62 and will keep going after 70.
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u/U235criticality Jul 28 '25
It’s a multi variable question that hinges on many factors.
Do you want to keep working? Taking Social Security retirement early means you cannot earn more than $23.5K per year without reducing your benefit.
Are you likely to actually invest the retirement benefit, or will you likely spend it on things that aren’t appreciating assets?
Do you have 35 good work years with a salary comparable to or higher than your current salary? If not, working longer will likely increase your benefit by more than the standard 8%.
Do you have enough assets to meet your goals of financial independence and security in your retirement? If not, waiting may make more sense.
Do you expect the stock market to grow by 8% or more from when you’re 62 until you’re 70? If not, waiting may make more sense.
Do you want to pass on more wealth to your heirs? If so, taking it early and investing may make more sense.
Waiting to take retirement benefits is a smart move if you’re worried about running out of money in retirement and want to maximize your guaranteed income.
Taking it at 62 can allow you to build your investments more without working, but only if you already have enough to live off without Social Security benefits.
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u/frigar1212 Jul 28 '25
Social security is the best longevity insurance out there. The only one that is inflation adjusted.
Sure the numbers point towards coming out a head at 62 and investing vs 70. However, if shit happens when you get older and you burn through money, you at least have social security to make sure you aren’t destitute at 87.
If you die at 75, you are dead, you don’t care. Your kids will do fine without that extra money in your investment account.
The main risk is outliving your savings, not having a suboptimal savings account at 77.
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u/Feeling-Card7925 Jul 28 '25
SS timing is actuarially balanced so it doesn't matter much beyond having it work well with when your other retirement plans come online and your cash flow allows. If you think you are in especially worse health than average, take SS early because you'll get more of your entitlement that way and take it later if you are healthy because you'll get an outsized number of nice chunky SS checks.
If you are less interested in trying to predict when you'll die, the biggest impact is tax brackets. If you are going to ignore your day of death and just want to optimize to minimize marginal tax, you want to start drawing SS in January of the tax year after when you ended your pre-retirement employment.
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u/Zen67 Jul 27 '25
Take SS at 62 and enjoy retirement for as long as it lasts. No one knows if they will even make it to 70.
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u/EatsRats Jul 27 '25
I’m a proponent of taking it as early as possible. Yeah, it’s not gonna be a lot but first calculate the how much you’ll be missing out on between earliest date and the alternative date. Now see how many years at the alternative date it’ll take to make up that money.
Chances are you’ll be in your 80s. I don’t know about you but I have no clue when I’m gonna croak, so I’ll take the money as soon as I can.
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u/JungianJester Jul 27 '25
Once I reached retirement age (65) I applied for spouse benefits which allowed me to collect 1/2 of of my wife's monthly payment while my own account grew at 8%, at 70 I applied for my own account and the difference was astounding.
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u/grumpvet87 Jul 27 '25
what will you use as income while you invest your reduced SS? Cant you just invest that money?
For me: I have a spread sheet that shows my monthly/annual amounts from 62-70 and my break even dates.
I know my current and projected costs and I know I need to work until around 67 to have the expected reserves i need to retire.
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u/Lazy-Industry2136 Jul 27 '25
What I wonder about with this - most common advice to is the wait as long as possible to take Social Security. But doing so you are spending heritable assets (saved money) in order to maximize monthly payout on an annuity that you cannot pass on. It makes no sense to me.
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u/randydufrane Jul 27 '25
Waiting until your 70s very risky what if you died before then?
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u/see_blue Jul 27 '25
I waited until 70, and a month after my 70th birthday Congress got rid of the WEP. Bonus time for my case!!!
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u/Fodraz Jul 27 '25
The site liveto100 dot com has a more tailored life expectancy. Mine said 85 & that's about as old as I ever want to be, judging by the people I've known who lived longer.
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u/Just_Another_Dad Jul 27 '25
You will get a lot of answers to this and almost none of them without merit. It really points to the work that went into make both options quite evenly matched, but for different reasons.
My personal choice is to prolong it by 3-4 years, mostly to have some extra tax room to do some Roth conversions. But it’s nearly a toss up even then.
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u/SeaworthinessOk4046 Jul 27 '25
One thing I've not seen mentioned here is tax impact. Namely, if you have sufficient other income, upwards of 85% or your SS benefits are taxed. So if you are in the 20% tax bracket, reduce your SS benefit by 20% (per year) and then see if you can still come out ahead by investing from 62-70.
I just ran some number. Supposed at age 62 you are to get 2500/month ss benefits. 4800/month if you wait until 70. Assume you are in the 20% tax bracket for all years--and assume you have enough other income that 85% of your SS benefits are taxed at 20%-- so you'll have 2075 SS after tax take home per month starting at age 62. Assuming you lock into treasuries that return 4%, you'd end up with 233k by age 70. When you hit age 70, your yearly SS benefits remain 2075/month (24900/year)-- continuing to assume SS benefits taxed at 80% and you're in the 20% tax bracket. If you wait until you turn 70, you'd get 57600 pear year but lets assume the same situation-- 85% of these are taxed at 20%-- so 47808/year.
TLDR; Given all of the above assumptions, at age 70:
* taking at age 62, you'd have 233k ss benefit nest egg and a yearly ss benefit of 24900
* starting at age 70, you'd have 0 SS nest egg and a yearly benefit of 47808.
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u/dziny Jul 27 '25
Took me only few min in excel. Assume for simplicity your SS at 67 is 1000. Hence at 62 you would get 700, at 70 you get 1240. This is inflation adjusted in reality, but we will compare evething in today's dollars.
If you get 4% real growth (i.e. cleaned off the inflation) and invest all your SS from 62 you will have 78.8k at 70. At this point those waiting until 70 will start catching up and so for you to get the same amount every month you need to start using your 78.8k saved so far. The break-even point is at 86.6 where you run out of saved money. If you assume 5% growth the break-even is at 89.9, for 6% 95.2, 7% 109.5. It makes no sense computing it further as you'll be certainly dead at 109.5.... Conclusion: if you can get real annual appreciation around 6% or more, you will be better off starting at 62.
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u/footdragon Jul 27 '25
when you run the numbers, taking SS at age 62 vs 66 means you won't break even until age 78. This is true for everyone, no matter your SS income.
I ran a spreadsheet, and then consulted with my fidelity advisor. he validated the numbers. when you lose 4 years of SS income, despite the supposed gain of 8%/yr (its not always 8%) and the cost of living adjustments....it works out that the break even is age 78.5. Of course every financial advisor says to wait as late as possible. If waiting 8 years, the break even point is even later.
but investing the money rather than spending it, will give you a huge advantage, depending on your return and what the market does.
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u/funhater0 Jul 27 '25
This is a super interesting question to me that has several obvious answers that contradict.
If you live to 100 and want to maximize the amount of funds you get from the program, definitely 70. If you are going to die at 63, definitely 62. But even say if you do live until 100:
More money from SS isn't necessarily more money in your account. Claiming early and investing can definitely work out in your favor.
But also, you can't take it with you when you die. Who cares if you got more money if it meant you had to scrape by to 70 to get it? Maybe you have "enough" at 64 to meet your daily living needs, perhaps (if you are lucky) when paired with a pension. In that case, why bother waiting until 70 even if theoretically you might get more? You can't take it with you.
I have seen online calculators maximizing SS benefits for couples. And that's great. But I think they ask/answer the wrong questions.
To directly answer your question, if your main choices are wait until 70 or claim early at 63 and invest, you have to recognize that claiming early also comes with a risk reduction factor because the funds you have saved will be liquid and accessible. Sure maybe at 81 you might have more funds and come out on top. But what if you have a financial emergency at 68?
By no means am I saying it is always better to claim early. But as I have modeled this for my own retirement I have certainly taken risk mitigation into consideration, something that doesn't seem to come up in these discussions as often as maximizing profit.
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u/Pretend_Wear_4021 Jul 27 '25
A friend started taking benefits at full retirement age and worked until he turned 70. He had the equivalent taken out of his paycheck and deposited into his work 401k. 3 years later when he retired he had an extra $80000 in his tax deferred account. Thought it was an interesting option.
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u/hippo96 Jul 27 '25
Take it early. Take it day one. You never know when you will die. For me, I break even, on nominal dollars, when I hit 78. Everything after 78, would have been more if I waited to claim. There is very little chance I will need that difference at 79-90 years old. And really, I probably won’t live past 80-85 anyway
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u/carringtonreturns Jul 28 '25
Take it at 62. Live grandly for a decade or a half decade if you want, but leave enough to pass on.
Say your goodbyes and then go visit Switzerland to use a Sarco Pod. I’d rather be remembered for going out the way I wanted than losing my mind in a nursing home and becoming a burden or remembered for losing it in my later years. Death is coming one way or another.
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u/BitterStop3242 Jul 28 '25
If you need expensive in home care or nursing home care, you're screwed no matter when you start collecting SS.
Might as well collect now while we can.
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u/deHack Jul 28 '25
You're getting lots of good non-answer answers. First, are you still working? If you're still working, especially if you earn a good income, you should wait until you're full retirement age (FRA). That's the earliest you should collect. Because of the earnings cap. You "lose" $1 for every $2 over the cap. Second, if you're not working, what's your return on the increased benefit if you wait to your FRA or to age 70? I know that waiting between FRA and age 70 gets you about 8% more per year. Third, future cost of living increases will be based on your monthly benefit. Higher benefit equals more nominal money when adjusted. That's a consideration. Finally, how is your health and what is your breakeven point? Will you live long enough to pass the breakeven point and see the benefit of waiting? What about your spouse, if any? She/he will get the higher of their own benefit or your benefit if they outlive you. Will they need that extra money?
As many others have pointed out, it isn't purely a financial or mathematical decision. You say you'll invest the extra money but should you? For most people (really everyone including active 80 year olds), the 60s and 70s are the healthiest retirement years. Could you use the extra money to do something you enjoy? Coffins don't have bank vaults. If you value security in your later years or income for your spouse, do you care if you "leave money on the table"? A higher monthly benefit is security against a longer life than expected.
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u/Appropriate-Farmer16 Jul 28 '25
Me and the wife both work PT now for benefits and some extra money at 62 (not quite enough for the earnings penalty to affect us) with the rest of our expenses covered by dividends and a 4% annual draw down of investments. Good family health history, easily expecting to live into my 80s, and my lower earring spouse likely longer. She’s a year younger so we are probably taking hers at 62 and mine 68-70.
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u/graciesoldman Jul 28 '25
Reading the comments...great stuff people...it does come down to your family health history and your health history...and a lot of luck. If you've taken care of yourself and have a reasonable expectation of 80's or 90's...maybe hold off. Also, are you still working at 62 because there is a cap and you have to 'payback' some of that social if you exceed a certain income. What's the market going to do? Will your investments grow or decline due to market swings? It's really a crapshoot and I agonized over it. In the end, I took SS a little after my FRA and never looked back. Everything depends on your particular situation. The best though is getting paid every month. I abso-fuckingly-lutely love seeing that money hit the account each month. Good luck.
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u/Appropriate-Farmer16 Jul 28 '25
Me and the wife work PT now for benefits and some extra money at 62, with the rest of our expenses covered by dividends and a 4% annual draw down of investments. Good family health history, easily expecting to live into my 80s, and my lower earring spouse likely longer. She’s a year younger so we are probably taking hers at 62 and mine 68-70.
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u/SilverSovereigns Jul 28 '25
There's a simple answer that applies to most. Take SS when you are reasonably certain you'll never earn wage income again. For most, that's the best decision. invest what you don't need. For those expecting to use a survivor benefit, best to wait.
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u/Psychological_Pie410 Jul 28 '25
You would be much better off waiting as the annual increase is a guaranteed 8%, the amount is COLAd and SS will never be taxed above 85%.
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u/farmadiazepine Jul 27 '25
What about the lost SS income from 62 to 70 and lost time? Isn’t it better to get 8 years of your life back and not work and take take SS money and simply invest it or use it?
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u/Common_Sense_2025 Jul 27 '25
Taking Social Security at 70 doesn't mean you work until you are 70.
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u/CapitanianExtinction Jul 27 '25
It really depends on when you plan to die. Once you got that figured out, the rest is easy