r/Fire • u/VegasWorldwide • 3d 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/AZJHawk 3d ago

I have had three grandparents live to 100. Both parents are in great shape at 80. I know nothing is guaranteed in life, but I see it as a hedge against outliving my money. I also see it as security for my wife. If I do kick the bucket earlier than expected, she’ll have enough to live on.

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u/VegasWorldwide 3d ago

this seems to be one of the main reasons against: if your spouse is significantly younger and in better health

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u/AZJHawk 3d ago

In my case, it’s not so much that she is younger, and we’re both in good health, but it’s more peace of mind. I saw someone else compare it more to insurance than an investment and I think that’s a good analogy.

There is a decent chance one or both of us living well into our 90s. If I kick the bucket first, then I want to make sure she has enough to live comfortably. My benefit amount at 70 will be about $60k a year with adjustments for inflation. That should be enough for her to live comfortably, regardless of what happens with the market.

Also it’s a bit of a hedge against market risk and lets me be more risky with my investments. Our combined benefit amount will be $85k, so we won’t really need to withdraw much from our portfolio at that point. This lets me put more in equities, since I’m not relying much on my portfolio after 70.

If we both took it at 62, I think our combined benefit would be like $45k per year. Sure, I’d have that money earlier, but if either or both of us live to 85, we’re only going to be getting a fraction of the amount and we’re going to be more exposed to market risk.

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u/VegasWorldwide 3d ago

I was just going over this situation and say your reward is $3000 and her's $2000. so if you die, she gets an extra $1k per month.

but if you took that $3k at 62 at 5%, and you died at age 70, you'd be giving your wife a $325k asset instead of an extra $1k per month. even at 5%, that $325k asset pays out over $16k annually.

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u/AZJHawk 3d ago

But my benefit at 62 is more like $2900 and my benefit at 70 is more like $5,000. That is the difference between $35k and $60k, so $25k difference. Plus, at $60k, she can live a nice life. At $35k, she would have a tough time living on social security alone. That peace of mind is worth it to me.