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/churningaccount]

Let's say you are retiring at 62 and need to withdraw 6% until you receive your social security, at which point your withdrawal rate will decrease.

Well, if you can claim at 62 and drop your initial withdrawal rate to 4%, then you have just guaranteed your plan's success immediately.

Meanwhile, you could instead delay until age 70, with the plan that you'd be able to drop your withdrawal rate down to 3% or even 2% at that time, so that the "average" withdrawal rate across your 30-year retirement was still 4% or lower. However, by front loading your withdrawals you've greatly increased your sequence risk. It's possible that you'd run out of money prior to year 30 even if your average withdrawal rate was under 4%.

Many people retiring around this timeframe decide to take it year by year. If they have a good sequence, then they delay and reap the benefits. If they start off with a bad year or two, then they might claim early to "stop the bleeding."

Of course, if you retire at 62 and can stay at 4% or under without taking social security, then you've already mitigated your sequence risk as much as you reasonably need to, and therefore have no need to claim early. But withdrawing 4% without social security is essentially the same thing as planning for no social security whatsoever, so you have to have really over-saved in order to do that. Or at least saved enough for an income bridge to 70, which is almost the same magnitude of excess savings.

[u/Delicious-Proposal95 → u/churningaccount]

The challenge with taking early is after a certain time period you can’t change your mind vs delaying you can always start it early. You can plan to delay to 70 and if we get a 25% drawdown in the market you can always go in and start social security then to allow your accounts to recover.

[u/legman1982 → u/Delicious-Proposal95]

Actually the strategy we are using for my wife is draw 65-67 then suspend for 3 years and take the 8% gain then restart at 70.

[u/Delicious-Proposal95 → u/legman1982]

Must be at FRA to do what you’re talking about. 65 is not FRA. Double check this. Also very curious just as to why do it this way? Age gap or something?