re: S/S - Do you plan to take at 62/67/70

I plan on receiving $0 in SS benefit. Anything is a nice surprise but the program won’t look anything like it does today whenever that time comes.

I would plan on taking as early as possible with as much tax efficiency as possible.

I’m 74 years old and waited until 70 to start getting Social Security.

Cliff notes on why. 1) didn’t need it. 2) In decent health and family history of relatives living into their 90’s. 3) Married and if I die first my wife would still get my higher payments.

Here are my numbers rounded off but close. If I started collecting at 66 I would have gotten about $30,000 a year. I figured by waiting until 70 I would get 1/3 more or $40,000. By the time I turned 70 it had gone up to $42,000. Fast forward to 2023 and I am getting almost $50,000 per year due to cost of living increases. So another benefit of waiting until 70 is that the cost of living increase on the higher amount is bigger. In other words a 3% (or any other %) is more on $40,000 than $30,000. And it compounds every year there is a COLA.

Several friends started at Full Retirement Age and several have waited until 70. As others have said there is no right answer for everyone. And, no one knows what will happen to Social Security payments in the future. My thought is that Congress will figure something out but not everyone will be happy.

62 the men in my family don’t have the best longevity

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I'd love to hear a rational explanation from someone arguing that this is not a Ponzi scheme.

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I wrote this earlier but still looking for some feedback. I have READ (not verified) that the actual social security fund / tax is purely an accounting measure so they know who to credit with which contributions and not what fully funds the program in perpetuity. So once the SS taxes stop covering SS they'll just pay for it with other taxpayer dollars.

Does this sound realistic? I don't know if the gov't has any rules about how they apply tax money to SS.

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You won’t be getting much of anything. I’m 44 and don’t expect a nickel. Boomers are going to bankrupt SS and Medicare.

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Boomers paid into all of their lives just as you have. Should they not get it and save it for you guys?

I'm 56 and have paid into it since I started working at 16 years old. I damn sure expect it to be there, and I'll start drawing it at 62. It will be there for your group. That is political suicide for any politician to eliminate SS.

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It will be there for your group. That is political suicide for any politician to eliminate SS.

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They'll have to make changes to the program or raise taxes. It can't exist in its current form long term.

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If you’re drawing from a 401k instead of taking SS, you’re probably leaving money on the table. If you consider the typical long term rate of return on investments plus the tax efficiency of SS, waiting isn’t mathematically sound.

Roth doesn’t really have much to do with it

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We may be on different planes.

What kind of retirement are you expecting?

Drawing social security, you are capped on income (not a ton) before you are penalized for drawing social security before FRA.

If you look at your social security distribution at age 62 and think "that's a lot of money", then go ahead and take it early.

If you look at social security plus $50,000 income and think... I'm going to be a homebody at that income without the freedom to do what I want: then you are better off holding off on social security and taking it later. Don't saddlebag yourself with income caps and penalties.

I disagree 100% on your Roth take.
Roth is not taxable income. It doesn't affect your social security draw or taxes.

If your social security income doesn't look appealing at age 62, supplement it with Roth and live the lifestyle you want in your early retirement.

And as for your long term return on investment... you are guaranteed an 8% increase in SS income for every year that you defer your social security income. Your COLA adjustments compound on top of those higher numbers.
You are not getting those guaranteed returns in the market.
And if you are comparing long term returns when your investment window is only 5 years (62 to 67)... then I don't know what to say. Most people don't get more aggressive in their portfolio 5 years before retirement. If that is you, then we absolutely on different planes of thinking.

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Drawing social security, you are capped on income (not a ton) before you are penalized for drawing social security before FRA.

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Capped on earned income, not passive income.

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I disagree 100% on your Roth take. Roth is not taxable income. It doesn't affect your social security draw or taxes.

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I know. I know everyone on the MT fully funds their Roth and what not, but that’s not the real world. Most people have a 401k and that’s it. Also, drawing on Roth in your 60s can have significant tax impacts as to your net estate down the road.

Take a couple that needs $4-$5k per month net of taxes to live. Let’s assume their SS income is $3,500 at 62. They can draw $42k from SS, $18k from their 401k/IRA, and still consider doing a $4k/yr Roth conversion without paying taxes. Not a single federal tax.


Or they can draw $60k from their 401k/IRA, and have to draw $64k to actually net $60k after federal taxes. Which is better? Is $4k in taxes worth the raise? What if the market is down considerably?

Also, you only get 8% raises per year if you wait until after normal retirement. Prior to that it’s discounted as much as 30% if you draw at 62 (which really amounts to 62 and 1m which means it’s 70.42% of benefits). Waiting from 62.1 to 63 amounts in a 6.5% raise YoY. 63 to 64 is a 6.67% raise, 64 to 65 is an 8.34% raise, 65 to 66 is a 7.68% raise, 66 to 67 is a 7.15% raise, 67 to 68 is an 8% raise, 68 to 69 is a 7.4% raise, and 69 to 70 is a 6.9% raise.

It works out to about a 7.4% annualized rate of return from 62 to 70.

Break even calculators only account for when cumulative SS payments pass each other up, but they fail to account for portfolio drawdowns in bad years, taxes, and overall rate of return of any spared savings.

66 8 months. A year and 8 months away

I understand that your roth accounts should be the last accounts you should touch