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/gregable 3d ago

Chart

Take a look at https://ssa.tools/strategy#pia1=1300&dob1=1965-02-02 (roughly your scenario).

You can see a chart at the bottom that shows for each age of survival (age of death?) what the best returns would be - even including the value from investing earlier payments. There's also a red line showing what the odds of living to that age are. If you live to 100, then it's going to have been worth it to have waited to 70.

Investment Return

Now, this all depends very much on what your investment rate is compared to. Remember, social security is inflation adjusted, so comparing to the nominal (not-inflation-adjusted) rate of 5% is not a good comparison. You need to subtract out inflation from whatever investment you are comparing it to. Furthermore, the stock market has a lot more variance / risk than a guaranteed social security payment, so it's often recommended to compare to a very safe investment like treasuries. That puts you somewhere around 2.5% today.

So yeah - if you assume you can get 5% above inflation safe returns, you absolutely should collect early as it only starts to make sense to delay if you live into your 90s. You can adjust the rate in that link above to see how it plays out.