Breakeven Analysis for Social Security Payments
Is there a dependable breakeven analysis to determine when one takes Social Security payments? I am 65 and my “full retirement age” is 66 years and 6 months. If I wait to take SS at 70 1/2, I’ll have a larger monthly payment, but will not have that income for 4 years. I plan to keep working until then and don’t need the income, so it is not a question of need. I thought I heard on your radio show that just crunching the numbers is not the correct way to determine the answer to this question. (By the way, I am big fan and listen every Wednesday!) Thank You!
Terry Says
Thanks for listening. It’s not an easy analysis — because you don’t know the significant factor: how long you’re going to live!
And there’s a wild card. Yes, you lose out on 4 years of benefits (though you get the plus of the cost of living increases along the way when you finally do take benefits).
But the wild card is future inflation. Delaying until age 70 not only give you an additional 8% base amount each year — BUT that larger base is where the COLA will be applied after you retire.
So unless you have a terminal illness or a family history of shorter life expectancies, my advice is always to wait until age 70 — assuming you can continue to work or live off other assets.
I like a guaranteed 8% annual return with an inflation adjustment these days!!
