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Author: Rayvt Big gold star, 5000 posts Top Favorite Fools Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 76384  
Subject: Re: What age to take SS payments? Date: 12/8/2013 6:16 PM
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Ray I will say it again you are misleading people. While you do CYA by saying SS in not clear about COLAs on the initial amount if one delays benefits after age 62 - those COLAs are present and real.

So why not run your spread sheet either without any COLA or apply them to the delayed benefit?


Indeed, the SSA is *not* clear about the COLAs during the deferral period. See of example: http://ssa-custhelp.ssa.gov/app/answers/detail/a_id/3/~/bene... and http://www.ssa.gov/OACT/quickcalc/early_late.html and http://www.ssa.gov/OACT/ProgData/ar_drc.html
No mention of COLAs, just the increase of 2/3% per month.

Do you have a link to anything on the SSA site which talks about the COLAs on delayed benefits? 'cause I looked and looked and didn't find any.

Anyway ..... the figures I gave in my last post *did* apply COLA during the defered period. I think that's the right way to do it, but haven't been able to find any authoritative answer anywhere. If/when I update my spreadsheet (which was last updated 3 yeara ago), I'll include that. And remove the "do-over", since that's no longer allowed.

The net result of this is the break even age is roughly 80.5 years if one neglects interest earned - not unreasonable for people who actually start at age 62.

I dispute that last bit. The people who start at 62 fall into 2 camps: those who *need* to take it and those who don't need to but do anyway.
For people who need to, delaying to 70 is not an option, so there's no need to debate it -- they still have to eat during those 8 years. (FWIW, one of my relatives is in this situation, and that's just how he explained why he didn't wait for the larger benefit.)

For people who don't need to, but do it voluntarily, then they can invest/save the payments, so it is appropriate to include earnings on the early benefits.

Your BE age is a bit optimistic. I get, for 2.8% COLA and 0% earnings, a breakeven age of 78.3 (not 80.5) for 62 vs. 70.
Even so, that's 16 years to break even. The life expectancy at 62 is 19 years, so you're ahead for 16 years and behind for 3 years.

::shrug:: When the SSA says "Age-related adjustments to Social Security benefits are intended to be actuarially equivalent, on average, rendering lifetime benefits invariant to the timing of first receipt." they really mean it.


However, the study http://www.treasury.gov/resource-center/economic-policy/Docu... says"We find substantial deviations from actuarial equivalence".
Unfortunately, it's in the wrong direction. (Wrong for the proponents of delaying, that is.) "For delayed claims, the eight percent credit scheduled in current law is too low for actuarial equivalence. There is an actuarial premiums for males."

"most male beneficiaries face actuarial premiums that decline with benefit acceptance after age 62 and most females face actuarial losses that also decline with delayed acceptance. Thus, males have little actuarial incentive to delay their initial benefit claim."
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