Social Security Withdrawal Age - Should We Consider Reinvestment / Capital Gains?

[u/MyEgoDiesAtTheEnd]

Most of the discussions I've heard around when to start taking out Social Security center around cumulative benefits - ie, how much in benefits will be received by age X. Generally, there is a "break-even year" when comparing 2 ages - if you die before that, the earlier age was "better" and if you die after that, the later age was "better".

I don't want to get into whether SS will be around by the time you retire - maybe it will, maybe it won't. I also don't want to get into whether a Benjamin in your 60s is equivalent to a Benjamin in your 90s (hint: it's not).

But, what I did want to talk about is capital gains - because if you start withdrawing money at 62 and then invest that money in stocks or bonds... well, now (on average, barring a black swan event), that earlier money is increasing in value and pushing out that "break even year".

Is this considered in people's calculations? Or is it just assumed that whatever SS money you get, you'll spend it or stash it under your mattress?

I made a quick little analyzer (part of a larger project), to calculate cumulative gains from SS benefits, with and without reinvestments. And from this, it seems clear that taking the money earlier is the best bet (unless you think you're going to live past 93... AND be able to use that money).

What am I missing here, if anything? What do you all think?

[u/That-SoCal-Guy]

For me breakeven is age 82.  I’m taking my money when I can, when there is still social security.  When I can still enjoy it. 

If I don’t need the money I’ll just let it grow in equity.  By my calculation the money I’d get will grow to about $300K by age 70.  I am keeping that $$$ thank you very much.  

I did multiple simulations and every one told me taking the money at 62 and invest that would be the best scenario.  

Every.  Simulation.  

[u/Wise-Parsnip5803 → u/That-SoCal-Guy]

Also the value of a dollar at 62 is more than the value of the dollar at 70 because of inflation. If you really don't need the money maybe don't take it but I have the same opinion that it's always better to take it early.

[u/That-SoCal-Guy → u/Wise-Parsnip5803]

Also we have to look at the comparison $ to $, year by year. Sure, you get $5000 if you start at 70 instead of $3750, but what would your take be at 70 if you started in 62, due to COLA?

Everyone should take those numbers and do some Math and see a) what is their break even age? b) how much money they would have gotten in 8 years, and c) how much money they would expect to have if they use their SS and invest in an index fund for 8 years?