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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Top Recommended Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 75615  
Subject: Re: What age to take SS payments? Date: 12/1/2013 11:24 AM
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62. Next question?

I created a spreadsheet a few years ago, to figure it out. Link:
https://docs.google.com/spreadsheet/ccc?key=0AlyWRtMroxvgdDI...


You'll find all sorts of different answers and reasoning on the web. Most of them are garbage, because they assume that a dollar today is worth the same as a dollar 8 years from today. This is sheer financial innumeracy.

SSA itself says that any age between 62 and 70 is the same, and are actuarially equivalent in what you'll collect over your lifetime. More money for fewer years, less money for more years.

This also explains why there is continual debate on the issue. There is no clear-cut answer, because *any* age between 62 and 70 is actuarially equivalent. The only difference is the shape of the income curve; the NPV's are all the same.

62 vs. 70, the naive (0% interest) break-even point is age 77. If you can make 6% on your money, the breakeven age is 94. If you can make 7%, the age is 132.
Note that the life expectancy of a 70 year old male is age 84, so any BE point past 84 is essentially infinity.

When I plug in reasonable assumptions for earnings rate, COLA, etc. into my spreadsheet, it always shows a breakeven age of around 87.
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