No. of Recommendations: 7
Yes, SS isn't certain. But I'll bet it's more certain than plenty of other stuff people are counting on (pension, health insurance during retirement from their employer, market returns) ...
Yes, but this discussion is about taking SS at 62 vs 70, and none of that other stuff enters into that comparison.


If SS is means tested, the more "levers" you have to pull, the more likely you'll be able to arrange things to your benefit. So, having some money in IRA/401k, some Roth money, some outside investments, will all enter into the equation.
Right. And we can probably write the talking-points now. Anybody else remember the words of Dick Gephardt? “the successful are winners of life's lottery.”

Guess how the people who have been deferring SS beyond their FRA will be categorized.

When push comes to shove, SS will be returned to what it was originally envisioned to be. A last-ditch backstop for old retired people who have NO other money, to keep them from starving to death.



But, looking at two scenarios:
-SS at age 62 plus you buy an annuity to increase your monthly income to the age 70 amount, vs.
-SS at age 70, plus live off the money you'd have paid for an annuity
showed the latter scenario to be much better in several ways.


Yes. Deferring SS to 70 has a better payback than buying a commercial annuity. So what?
You can only "buy" a specific amount, determined by the SSA.
You can only "buy" it at a certain age.
You can't buy more, you can't buy it whenever you want.

If your FRA@66 is $1,333, your 62 benefit is $1000; your age 70 benefit is $1760.
So the 8-year deferred "annuity" you are buying is $427/mo. (COLA'd, which is nice.)

That annuity costs you $1000/mo for 96 months, a total of $96,000.
You say you don't want $427/mo? You want $1,000/mo? Too bad. You want $400/mo? Too bad. You get $427/mo, take it or leave it.

Not to mention the famous quote, "I have altered the deal. Pray I don't alter it further." The government can say that to you. The annuity company cannot (although they can go bankrupt).


Lost in the roundoff----
Say you've got $1,000,000 in retirement investment accounts. 4% SWR is $40,000/yr
Add $1000/mo (age 62 SS) = $52,000/yr
vs.
add $1760/mo = $61,000/yr (ignoring the money you had to withdraw for 8 years to replace the deferred SS).
vs. *Not* ignoring that, back-of-envelope calculation-- at 70 your account would be $1M minus $96K = ~$905,000. 4% SWR is $36,200.
$36,200 + $1760/mo = $57,300/yr.

Is a $57K lifestyle significantly different from a $52K lifestyle?

But for us top 20% income people, we laugh at $1million portfolio. We are looking at or planning on a $2M or $3M portfolio.

Eh, I don't have a dog in that fight. I took SS at 62 because a 10-12 year break-even period is too long to be acceptable.
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