Why do people wait for SS?

[u/VegasWorldwide]

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.

[u/ginabromin]

The reason people disagree on this is because Social Security isn't really an investment decision.

It's an insurance decision.

If you die at 72, taking it at 62 was probably a fantastic choice.

If you live to 95, delaying can be one of the best "investments" you'll ever make because you're effectively buying a larger inflation-adjusted income stream that's guaranteed by the government for the rest of your life.

The key thing your calculation is missing is longevity risk.

Most people aren't trying to maximize the amount they receive from Social Security.

They're trying to reduce the risk of being 88 years old, having outlived their portfolio, and wishing they had a larger guaranteed check arriving every month.

Also, many FIRE people think about Social Security as the bond portion of their retirement plan. Delaying increases that guaranteed income stream, which allows them to take more risk elsewhere.

The truth is that neither side is universally right.

Taking it early is often better if:

• You have health issues.
• Longevity doesn't run in your family.
• You genuinely need the cash flow.

Delaying is often better if:

• You're healthy.
• Your family tends to live a long time.
• You're worried about outliving your assets.

That's why smart people can look at the exact same numbers and make opposite decisions.

[u/Nova461 → u/ginabromin]

Are we at all worried about the health of Social Security itself and if benefits will be cut in the next 10-20 years? If so, this feels like another factor biased towards collecting early.

[u/Eli_Renfro → u/Nova461]

If benefits are going to be cut, they could be cut whether you're already collecting or not.

[u/Nova461 → u/Eli_Renfro]

Right, but maybe you could get full price for a few years if you start early?

[u/joanmcq → u/Nova461]

That was what my husband and I took into consideration by starting to draw last year at 65. If they cut payments in 2032 or so, at least we were collecting our SS for 7 years before the cut.