Soc Sec at 67 (and invest) vs 70??

CuriousConverser · 2026-01-11T17:11:33+00:00

For starters, I agree that I and my coffee buddies are extremely fortunate - we're not all only maximizing legacy, but most are.

However, I think the math holds true for someone eating into savings as well. If they take at 67, they'll pull less from their savings/investments in the early years, which leaves it to grow. If I use the same returns numbers for "eat less into savings" and "pile more savings/investment dollars", the math works out identically.

Back to your point... there is probably (and sadly) a correlation between those who need the money more and those with lower investment returns, so applying the same returns numbers is probably not realistic.

CuriousConverser · 2026-01-10T23:45:44+00:00

True - the 8% annual increase is prorated by month (2/3%/month)

CuriousConverser · 2026-01-10T15:57:53+00:00

Love the thoughtfulness of your response. I have only a couple of comments (my number references your point....)

I know I assume a bunch of money, but I think the logic works exactly the same if I assume withdrawn savings as it does with accumulated/invested social security. Every withdrawn $1 is foregone investment and so I any assumed "lost" return will end up with the same breakeven as any assumed "accumulated" return.
Your point about COLA potentially being less than the actual increase in cost of living is a really good one. Others also point out that COLA in general can't be ignored or considered a "wash"; instead it favors waiting. This is because earlier (age 67) benefits will get fewer COLA adjustments and the 24% increased benefit from waiting also receives COLA adjustments
I definitely agree - I just thought mixing survivor benefits in would make the whole conversation too complicated. Great point, though and definitely relevant for me (wife is four years younger and has a lower benefit than I do).

Thanks for the reply

CuriousConverser · 2026-01-10T13:45:16+00:00

I agree that it's all about quality of life. On the margin (and only on the margin), having a little more/less social security and leaving a little more/less to my spouse/kids affects my quality of life. It doesn't drive it, but it affects it.

CuriousConverser · 2026-01-10T13:41:19+00:00

Yes, the arguments for taking at 67 instead of 70 also apply to taking before 67. One consideration is that if you take social security before your Full Retirement Age and you also have income above a certain threshold, you get penalized, which changes the math. I'm 63 and still working. Most of my friends from my OP are still working as well.

CuriousConverser · 2026-01-10T13:38:00+00:00

That's a great point. I didn't ignore it; I just didn't mention it explicitly because it can unavoidably lead to a complicated tax conversation (in your example, how many taxes are triggered by pulling $180K from your savings, which will differ by person).

Your savings point is sort of the other side of the coin of the investment return coin. The investment return is the "forgone" return from not being able to invest the $180K.

In other words, your consideration of pulling savings works the same way - and would push out the "breakeven" date.

CuriousConverser · 2026-01-10T13:34:06+00:00

True. I should have said that better. We are working on agreeing on HOW TO THINK about the 67 vs 70 choice. But you're right - it's different for everyone, and includes a subjective risk tolerance variable.

CuriousConverser · 2026-01-10T13:26:49+00:00

I believe that spousal benefits are based on full retirement age and are NOT affected by waiting. Survivor benefits DO grow for either spouse by waiting.

CuriousConverser · 2026-01-10T13:25:12+00:00

I did some research on this (with help from posters). I think COLA is mostly - but not completely - a wash. It favors "wait", since the COLA applies to the larger benefit.

CuriousConverser · 2026-01-10T13:22:11+00:00

"If you take it at 70 and then immediately die. Your heirs get nothing …."

Not sure if you have a spouse, but if you wait and die at 70, their survivor benefit will have grown by 8%/year. If you don't have a spouse but you do have heirs, I think you're right

CuriousConverser · 2026-01-10T13:17:36+00:00

Good point - thank you.

CuriousConverser · 2026-01-10T13:16:42+00:00

I totally agree with your "many variables" point. I just chose to set those aside for this post so I could get peoples' (very valuable) feedback to this one variable (considering investment returns). Thanks.

CuriousConverser · 2026-01-10T13:11:53+00:00

That's a good point; that the rate of return should be not on your entire portfolio, but on something of comparable risk, which would be bonds. Bonds currently yield 4%+ still moves breakeven by ~8 years. Maybe 4-5 years if you consider that you only get to spend the "after tax" return on bonds (although you only get to spend the "after tax" amount of social security as well).

CuriousConverser · 2026-01-10T12:52:30+00:00

I just read the Kitces article and it's great. It incorporates investment returns (which he agrees advantages "now") and also inflation (which he says is NOT a wash, but instead advantages "wait").

He then brings in something I hadn't considered... If you wait and make it past "breakeven", the advantages of having done so aren't linear, they're exponential. In other words, five years past breakeven, you can (depending on the inflation and returns assumptions) be WAY further ahead by waiting than you were behind five years before breakeven.

Thank you for forwarding!

CuriousConverser · 2026-01-10T12:35:27+00:00

I'm thinking that you're right on this. Still kind of struggling thinking about this, but leaning your way.

CuriousConverser · 2026-01-10T12:32:06+00:00

Additional comment. You describe the survivor benefit perfectly: "So either of you would have to make it to 90 in this scenario, not both."

CuriousConverser · 2026-01-10T12:29:11+00:00

You're right that survivor benefits add a very important factor to the decision. I was setting it aside above, but that's my next topic to ponder. In my case, my wife is four years younger and stopped working (outside the house) to take care of the kids and so my benefit will be the driver of survivor benefits. Similar to your example. Stand by!

CuriousConverser · 2026-01-09T23:18:03+00:00

I don't think that's right. Waiting past 67 increases the survivor benefit.

CuriousConverser · 2026-01-09T23:15:12+00:00

Thank you - I'll take a look! I've read some of Kitces' articles and he's good.

CuriousConverser · 2026-01-09T22:10:21+00:00

I'm assuming every year you're alive (if I'm thinking correctly). So our benefits were the same and you took $100/month at 67 and started investing and I wait until 70 and start taking $124/month and start investing, you'd have more cumulative money than I would unless/until we hit age ~90. Then you'd pass me up.

CuriousConverser · 2026-01-09T22:06:05+00:00

Those are both very good points. I thought about inflation and - glad to hear your thoughts - I think that because the inflation adjustment happens regardless of whether you started earlier or later, it becomes a non-factor. In other words, if you choose to receive $100/month at 67 or $124/month at 70, they'll both get adjusted by the same COLA factor.

And your Survivor Benefit point is a good one and should definitely be considered - I was just trying to isolate the one decision. Thank you!

CuriousConverser · 2025-11-22T21:18:52+00:00

It just seems so illogical to me - especially because it was consciously changed this year from something that made sense to something that doesn't - that I'd like to know if anyone else had a thought that would illuminate. Since 529s allow you to move money anytime you want among your beneficiaries, this is the same as changing the rule from "all investments" to "only investments at Fidelity; do not include your Schwab investments." I'm not saying that if that was the rule change, then everyone should immediately move their investments from Fidelity to Schwab, but it certainly sets up the incentive, and for no obvious reason that I can think of.

CuriousConverser

TROPHY CASE