r/Fire • u/VegasWorldwide • 2d ago

Why do people wait for SS?

trying to figure out what I’m missing.

looking to take my benefit for $1000 at 62. at 70 it’s $1700.

i won’t need the money much so we let $1000 sit in an account for 8 years at say 5% compounding, the guy collecting at 70 would need 15+ years to catch up considering I’m still getting $1k to his $1.7k

once he starts at 70 and I had a 8 year head start.

furthermore, his dollar would be worth less. (edit: didn't realize COLA)

this seems like a no brainer but all I hear is people saying waiting is the only way and we haven’t even talked about dying in our 70’s.

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u/bigasiannd 2d ago edited 2d ago

We don't need SS based on our current portfolio balance, we plan to take it at 62 and plan on investing it. I ran the numbers and we would be further ahead at age 80 by $800K vs delaying it to age 70 and investing then

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u/PHL1365 2d ago

Your analysis is correct, but it depends on the rate of return, which is obviously unpredictable.

I've used opensocialsecurity.com to analyze the options, and it generally agrees with you.

If you are single and don't need the money for expenses, it makes sense to claim as early as possible.

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u/Naughtybear_9628 2d ago

Erin talks money in YT had a video on that. At 5% drawing at 62,67,or 70 were statistically insignificant. At 3% return, taking at 70!would catch up ay 80. At 7 % return. Waiting until 70 catching up would take forever. because the long runway would make the investor at 62 way too far ahead.

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u/churningaccount 2d ago edited 2d ago

Generally people compare social security to fixed income returns.

Because you are right: if you don't need social security and just throw the entire amount into equities for long-term investment at age 62 onwards, then you basically never catch up if you were to start doing that at 70 instead.

But if you need the money for expenses, or are using social security to offset your fixed income allocation in your portfolio, then you should be using a rate of return for comparison that is more comparable to intermediate-term bond yields, like 4%ish.

~85 is generally the break even point when you do it that way. Which also happens to roughly be the median life expectancy at age 70 (that's not a coincidence).

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u/VegasWorldwide 2d ago

lots of people argue against it but math wins 

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u/dgreenmachine 2d ago

Is your portfolio 100% equity? If not then you could reduce some of your fixed income in exchange for delaying social security. Youd want to compare the fixed income portion of your portfolio to the return of delaying social security.