Social Security Claiming Strategy - Best Calculator?

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FrugalInvestor
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Social Security Claiming Strategy - Best Calculator?

Post by FrugalInvestor »

I'm in the process of planning my and my wife's social security claiming strategies. I think I know what is going to work best (or at least well) for us, but I also know that I don't understand all the nuances of how the calculations work or, for that matter, what all the rules are! So I'm looking for suggestions/direction. I could post all of details here but I am hoping that there's a calculator available either on the SSA website or elsewhere that will do the heavy lifting once I enter all the relevant data. Is that the case, and if so, where so I find it?

If there isn't a calculator that will give me a reliable answer, what's the best way to figure it out?
Last edited by FrugalInvestor on Thu Aug 06, 2020 7:12 pm, edited 1 time in total.
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Re: Social Security Claiming Strategy - Best Calculator?

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Re: Social Security Claiming Strategy - Best Calculator?

Post by Watty »

Kenkat wrote: Thu Aug 06, 2020 7:11 pm I really like www.opensocialsecurity.com
+1

It was created by Mike Piper who posts here as Oblivious Investor and he wrote the book "Social Security Made Simple"

https://www.amazon.com/Social-Security- ... 319&sr=8-4

https://obliviousinvestor.com/

One thing that is really nice about this web site is that it also takes the odds that you or your spouse will live to a certain age. For example it takes into account the odds that you will live to be 62,63,64....90,91,92, etc. Many other calculators will only assume that you live to your life expectancy which might be something like 80.

It does not try to take the tax impact of various options into account so you will still need to dig into the details and it could be that tax issues might cause you to do something else.

It will also let you compare the difference in two claiming strategies. In my case the difference in the expected optimal value and me starting at by full retirement age was only $23K so I may decide to start it at my FRA.
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Re: Social Security Claiming Strategy - Best Calculator?

Post by JoeRetire »

https://opensocialsecurity.com/ is a terrific tool. Unless you have a really unusual situation, it will accurately estimate an optimal claiming strategy, explain it well, and give you the details. It will also let you play around with various factors (such as age at death) to see how they could affect your strategy. Best of all, it's free.

It was created by Mike Piper who really knows his stuff. He posts here, and wrote "Social Security Made Simple: Social Security Retirement Benefits and Related Planning Topics Explained in 100 Pages or Less".

If you have a more complicated situation, try https://maximizemysocialsecurity.com/. It's the most comprehensive tool I have seen. It also will accurately estimate an optimal claiming strategy, explain it well and give you the details, and let you vary the factors and see their impact. It's inexpensive, but not free.

It was created by Larry Kotlikoff who also really knows his stuff. He is one of the authors of the best book on Social Security I have read, "Get What's Yours - Revised & Updated: The Secrets to Maxing Out Your Social Security".
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Re: Social Security Claiming Strategy - Best Calculator?

Post by Wrench »

Watty wrote: Thu Aug 06, 2020 7:30 pm
Kenkat wrote: Thu Aug 06, 2020 7:11 pm I really like www.opensocialsecurity.com
+1

It was created by Mike Piper who posts here as Oblivious Investor and he wrote the book "Social Security Made Simple"

https://www.amazon.com/Social-Security- ... 319&sr=8-4

https://obliviousinvestor.com/

One thing that is really nice about this web site is that it also takes the odds that you or your spouse will live to a certain age. For example it takes into account the odds that you will live to be 62,63,64....90,91,92, etc. Many other calculators will only assume that you live to your life expectancy which might be something like 80.

It does not try to take the tax impact of various options into account so you will still need to dig into the details and it could be that tax issues might cause you to do something else.

It will also let you compare the difference in two claiming strategies. In my case the difference in the expected optimal value and me starting at by full retirement age was only $23K so I may decide to start it at my FRA.
+1
I have used this site, and also purchased maximize my social security program written by Larry Kotlikoff, a professor at BU. They both gave similar results.
I will offer a different take on claiming strategies based not on expected net present value (NPV), (which is how the programs do it) but rather from a risk reduction strategy. From my perspective, the greatest financial risk for healthy older people is that they will live a very long time and run out of money. To reduce that risk, you should maximize any income sources that will last your lifetimes, especially if they are inflation adjusted like SS. So, if you and your spouse are both healthy without underlying risk factors for either of you, i.e., you have a reasonable chance of living a long time, AND you do not need the income for everyday living, you should both take SS at age 70. (This is the result you would likely get from all the programs if you put in very high ages of death for both of you, e.g., 98 or 99 or above). Not only will you maximize your (inflation adjusted) income while you are alive, but you are in essence buying longevity insurance (i.e.,extra income) in case you both live a very long life. Should one of you die young than you may not have received the maximum NPV from your claiming strategy. But that's OK because in essence you traded that "lost" NPV for "insurance" against the situation where you both live a very long life. (As an aside, for my wife and I (she is one year younger than me) the mortality tables show there is a 50% chance one of us will live to 90, and a 25% chance on of us will live to 95. You may want to run the figures for you and your wife).

Good luck in your planning!

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Re: Social Security Claiming Strategy - Best Calculator?

Post by FrugalInvestor »

Thanks for all the information. I had seen Mike Piper's calculator mentioned here, as a matter of fact I recall when he was posting and asking for input as it was in development. Thanks for reminding me and directing me to it.

I am a bit confused by the results that the calculator provided. I am 8 years older than my wife and earned a greater amount over more years. The calculator recommends that I claim at 70 (which I've been planning to do) and that she draw at 62 and one month. That came as no surprise either, other than the one month but that's really of no consequence (I'm guessing it's due to the year she was born).

What confuses me is that the results indicate that as long as we're both alive I draw my benefit as expected but she draws her reduced benefit plus a spousal benefit. The two added together are nearly what her benefit benefit would have been had she drawn at at her FRA on her own account. I thought she would either draw on her account or mine, not some on both.

Also, if she dies first I continue to to draw my benefit that will start when I'm 70 as expected. She, however, continues to draw her reduced benefit plus the amount of mine necessary to bring it up to my full benefit at 70. In other words she will draw the same amount that I would should she die.

Do these scenarios sound correct? If so (and I expect they are) then I obviously have never fully understood the rules. :confused
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Re: Social Security Claiming Strategy - Best Calculator?

Post by afan »

Open Social Security is a wonderful program. It makes it easy to investigate the effects of longevity for each member of a couple, changes in SS benefits and so forth. It often shows that the present values of various strategies does not duffer by much. Down to the penny calculations seem superfluous when dealing with a big unknown of how long you will live- distinguished from life expectancy.

On the other hand, OSS does.not account for a number of other factors that should be considered. Your tax rates may vary between the years you are still working, after retirement before age 70 (and before RMDs) and after 70. So the raw income figures may not reflect your after tax income. OSS effectively assumes tax rates will be the same at all times. Since this is unlikely, it may not give you an optimal answer. It also ignores health insurance costs- ACA subsidies for those not yet eligible for Medicare and Medicare premiums later.

I THINK the Kotlikoff program accounts for more of these factors, so it should get you closer to a true optimum.

Again, not knowing when you will die makes any ideal strategy speculative.

For married couples with one earner whose benefit will be larger than the other's, it is often good for the higher earner to delay. But the actual "best" answer is elusive.
Of course, tax rates, health insurance and Medicare costs can change in the future, throwing off the best plans.

My comments about getting close and the difference between close and perfect being small applies ever more as you move your claiming date earlier- the unpredictable nature of longevity is more of a factor.

OSS is free. Pure generosity on the part of Mike Piper, he certainly could charge for it.

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Re: Social Security Claiming Strategy - Best Calculator?

Post by ObliviousInvestor »

FrugalInvestor wrote: Fri Aug 07, 2020 8:15 pm I thought she would either draw on her account or mine, not some on both.
This is a common misconception. In reality, it's pretty uncommon for a person to get just a spousal benefit. (That would only happen in the case of a restricted application -- for people born before 1/2/1954 -- or in the case that a person doesn't have 40 credits of coverage based on their own work history.)

Much more common is the case in which a person gets their own retirement benefit, plus a spousal benefit, with the spousal benefit being reduced by the greater of their own retirement benefit or their own PIA. Here's some more info on that topic:
https://articles.opensocialsecurity.com ... d-spousal/
https://articles.opensocialsecurity.com ... lculation/
FrugalInvestor wrote: Fri Aug 07, 2020 8:15 pm Also, if she dies first I continue to to draw my benefit that will start when I'm 70 as expected. She, however, continues to draw her reduced benefit plus the amount of mine necessary to bring it up to my full benefit at 70. In other words she will draw the same amount that I would should she die.
Yep.
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Re: Social Security Claiming Strategy - Best Calculator?

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afan wrote: Fri Aug 07, 2020 10:28 pm On the other hand, OSS does.not account for a number of other factors that should be considered. Your tax rates may vary between the years you are still working, after retirement before age 70 (and before RMDs) and after 70. So the raw income figures may not reflect your after tax income. OSS effectively assumes tax rates will be the same at all times. Since this is unlikely, it may not give you an optimal answer. It also ignores health insurance costs- ACA subsidies for those not yet eligible for Medicare and Medicare premiums later.

I THINK the Kotlikoff program accounts for more of these factors, so it should get you closer to a true optimum.
I know his MaxiFi planner accounts for taxes, Medicare premiums, etc. I was under the impression that Maximize My Social Security is pretty strictly Social Security analysis, but I could be wrong. Can anybody confirm either way?
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Re: Social Security Claiming Strategy - Best Calculator?

Post by ObliviousInvestor »

JoeRetire wrote: Fri Aug 07, 2020 3:45 pm If you have a more complicated situation...
On the topic of complicated situations, what do you have in mind here?

For instance per my immediately prior post, does MaximizeMySocialSecurity account for taxes/IRMAA? I thought it didn't, but I'd be interested to hear from somebody who has used it a lot (as I believe you have?).
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Re: Social Security Claiming Strategy - Best Calculator?

Post by FrugalInvestor »

Thank you for piping up Mike! Sorry for that. :(

Another question I have is what happens to my wife's benefit if I die between the time I reach 70 and when she reaches 70 eight years later?
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Re: Social Security Claiming Strategy - Best Calculator?

Post by Eagle33 »

FrugalInvestor wrote: Sat Aug 08, 2020 12:04 am Thank you for piping up Mike! Sorry for that. :(

Another question I have is what happens to my wife's benefit if I die between the time I reach 70 and when she reaches 70 eight years later?
Have you gone to opensocialsecurity.com and enter that scenario? It allows you to override the lifespan tables and pick your lifespan.
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Re: Social Security Claiming Strategy - Best Calculator?

Post by Wrench »

ObliviousInvestor wrote: Fri Aug 07, 2020 11:22 pm
afan wrote: Fri Aug 07, 2020 10:28 pm On the other hand, OSS does.not account for a number of other factors that should be considered. Your tax rates may vary between the years you are still working, after retirement before age 70 (and before RMDs) and after 70. So the raw income figures may not reflect your after tax income. OSS effectively assumes tax rates will be the same at all times. Since this is unlikely, it may not give you an optimal answer. It also ignores health insurance costs- ACA subsidies for those not yet eligible for Medicare and Medicare premiums later.

I THINK the Kotlikoff program accounts for more of these factors, so it should get you closer to a true optimum.
I know his MaxiFi planner accounts for taxes, Medicare premiums, etc. I was under the impression that Maximize My Social Security is pretty strictly Social Security analysis, but I could be wrong. Can anybody confirm either way?
I have used both of Kotlifoff's programs, MaximizeMySocialSecurity, and ES Planner (the stand-alone version of the online MaxFi). I can confirm that ESPlanner does account for taxes, while MaximizeMySocialSecurity does not.

By the way, thank you Mike Piper for providing an awesome resource to the community in your opensocialsecurity.com web site. You should be commended for your generosity!

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Re: Social Security Claiming Strategy - Best Calculator?

Post by GmanJeff »

Vanguard uses this tool when assisting PAS clients: https://www.socialsecuritysolutions.com/
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Re: Social Security Claiming Strategy - Best Calculator?

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Wrench wrote: Fri Aug 07, 2020 5:05 pmSo, if you and your spouse are both healthy without underlying risk factors for either of you, i.e., you have a reasonable chance of living a long time, AND you do not need the income for everyday living, you should both take SS at age 70.
I agree with your thought to minimize longevity risk, and this strategy may work out correctly for your particular situation (as it does for me), but it does not properly account for all cases, and should not be suggested for everyone.

Playing around with different birth dates and different PIAs for spouses will show you that in many cases, it is NOT optimal for BOTH to delay until 70.
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Re: Social Security Claiming Strategy - Best Calculator?

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ObliviousInvestor wrote: Fri Aug 07, 2020 11:22 pm
afan wrote: Fri Aug 07, 2020 10:28 pm On the other hand, OSS does.not account for a number of other factors that should be considered. Your tax rates may vary between the years you are still working, after retirement before age 70 (and before RMDs) and after 70. So the raw income figures may not reflect your after tax income. OSS effectively assumes tax rates will be the same at all times. Since this is unlikely, it may not give you an optimal answer. It also ignores health insurance costs- ACA subsidies for those not yet eligible for Medicare and Medicare premiums later.

I THINK the Kotlikoff program accounts for more of these factors, so it should get you closer to a true optimum.
I know his MaxiFi planner accounts for taxes, Medicare premiums, etc. I was under the impression that Maximize My Social Security is pretty strictly Social Security analysis, but I could be wrong. Can anybody confirm either way?
You are correct. Maximize My Social Security is for SS claiming strategies only. It doesn't account for taxes, Medicare, ACA, etc.
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Re: Social Security Claiming Strategy - Best Calculator?

Post by ObliviousInvestor »

FrugalInvestor wrote: Sat Aug 08, 2020 12:04 am Another question I have is what happens to my wife's benefit if I die between the time I reach 70 and when she reaches 70 eight years later?
When you die, her benefit as your spouse will end. Her own retirement benefit will continue.

In a scenario in which you die after having filed for your retirement benefit, if she files for her benefit as your survivor after reaching her survivor FRA, her total benefit (retirement benefit + widow benefit) would be equal to the amount you were receiving (unless you were receiving less than 82.5% of your PIA, in which case her total benefit would be 82.5% of your PIA).

If she files for her benefit as your survivor prior to reaching her survivor FRA, her widow's benefit will be reduced.
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Re: Social Security Claiming Strategy - Best Calculator?

Post by ObliviousInvestor »

Wrench and JoeRetire, thank you for the additional information regarding other calculators.
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Re: Social Security Claiming Strategy - Best Calculator?

Post by IowaFarmBoy »

I just went in to look at the tool and noticed that it uses the yield on 20 year TIPS for the discount rate which is currently negative (-.72%). I'm trying to think through the implications of this. It seems like this would really push toward delaying the start of benefits. If I try a positive rate, it gives me a younger age. The 20 year TIPS rate does seem like a good rate to use but I'm not sure it will continue to stay negative over my entire term and want to think through the implications of this.
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Re: Social Security Claiming Strategy - Best Calculator?

Post by Wrench »

JoeRetire wrote: Sat Aug 08, 2020 5:54 am
Wrench wrote: Fri Aug 07, 2020 5:05 pmSo, if you and your spouse are both healthy without underlying risk factors for either of you, i.e., you have a reasonable chance of living a long time, AND you do not need the income for everyday living, you should both take SS at age 70.
I agree with your thought to minimize longevity risk, and this strategy may work out correctly for your particular situation (as it does for me), but it does not properly account for all cases, and should not be suggested for everyone.

Playing around with different birth dates and different PIAs for spouses will show you that in many cases, it is NOT optimal for BOTH to delay until 70.
Agree 100%. Every person's situation is different, and everyone should evaluate their own financial resources and health to find what is optimal for them. I was just trying to point out that optimizing NPV should not be the ONLY criteria in selecting a claiming criteria, and the risk mitigation in claiming later for the case of living a very long time is a valuable factor that is often overlooked. To increase one's NPV by a few thousand dollars by having one spouse claim early may not be worth it if there is a reasonable chance of living a very long time. On the other hand, if it is $100K difference, that is potentially a very different story.

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Re: Social Security Claiming Strategy - Best Calculator?

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IowaFarmBoy wrote: Sat Aug 08, 2020 7:00 am I just went in to look at the tool and noticed that it uses the yield on 20 year TIPS for the discount rate which is currently negative (-.72%). I'm trying to think through the implications of this. It seems like this would really push toward delaying the start of benefits.
Yes, a very low discount rate definitely does push toward delaying benefits.

A 0% real rate threshold though is sort of arbitrary.

If the calculator did everything in nominal terms (i.e., including separate inputs for nominal discount rate and inflation rate), it would make sense to have some logic in the code saying "default nominal discount rate should be no less than 0%" -- because you always have the option of just letting your money sit in a checking account, or even holding literal cash.

But in real terms, there really can be circumstances in which you don't have a safe 0% real return option available to you.

As related note though, I-Bonds are another safe inflation-adjusted option. If I could find an API anywhere that provided data about the "fixed rate" component on current I-Bonds, then (maybe?) it would make sense to set the calculator up to use the greater of that or the yield on 20-year TIPS as the default discount rate. (An issue with that idea is that there's a limit to annual I-Bond purchases, so for many people -- especially those with higher earnings history -- I-Bonds are only partially available as an alternative option.)
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Re: Social Security Claiming Strategy - Best Calculator?

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Deleted...addressed below.
Last edited by FrugalInvestor on Sat Aug 08, 2020 9:19 am, edited 1 time in total.
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Re: Social Security Claiming Strategy - Best Calculator?

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ObliviousInvestor wrote: Sat Aug 08, 2020 6:33 am
FrugalInvestor wrote: Sat Aug 08, 2020 12:04 am Another question I have is what happens to my wife's benefit if I die between the time I reach 70 and when she reaches 70 eight years later?
When you die, her benefit as your spouse will end. Her own retirement benefit will continue.

In a scenario in which you die after having filed for your retirement benefit, if she files for her benefit as your survivor after reaching her survivor FRA, her total benefit (retirement benefit + widow benefit) would be equal to the amount you were receiving (unless you were receiving less than 82.5% of your PIA, in which case her total benefit would be 82.5% of your PIA).

If she files for her benefit as your survivor prior to reaching her survivor FRA, her widow's benefit will be reduced.
So to restate to make sure I understand.....If I were to die prior to her reaching her FRA and she delays filing for her survivor's benefit it would continue to grow up to the time she reaches her FRA (but not beyond). At the time she reaches her FRA her survivor's benefit would be equal to what I was receiving when I died (I will be receiving more than 82.5% PIA). Correct?

I will go in and play with ages in the calculator (thanks for the reminder Eagle33).

Thank you again Mike for taking the time to clarify all of this! :beer
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Re: Social Security Claiming Strategy - Best Calculator?

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FrugalInvestor wrote: Sat Aug 08, 2020 9:13 am So to restate to make sure I understand.....If I were to die prior to her reaching her FRA and she delays filing her survivor's benefit would continue to grow up to the time she reaches her FRA (but not beyond).
Correct.
FrugalInvestor wrote: Sat Aug 08, 2020 9:13 am At the time she reaches her FRA her survivor's benefit would be equal to what I was receiving when I died (I will be receiving more than 82.5% PIA). Correct?
Corrct, as long as you filed at an age such that you were receiving > 82.5% of your PIA.

Of note, if you die prior to her survivor FRA, if she hadn't already filed for her own retirement benefit by such point, she should go ahead and file for it at that time. (She can collect it while waiting for her survivor benefit to max out at her survivor FRA.)
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Re: Social Security Claiming Strategy - Best Calculator?

Post by afan »

Wrench wrote: Sat Aug 08, 2020 5:26 am
ObliviousInvestor wrote: Fri Aug 07, 2020 11:22 pm
afan wrote: Fri Aug 07, 2020 10:28 pm On the other hand, OSS does.not account for a number of other factors that should be considered. Your tax rates may vary between the years you are still working, after retirement before age 70 (and before RMDs) and after 70. So the raw income figures may not reflect your after tax income. OSS effectively assumes tax rates will be the same at all times. Since this is unlikely, it may not give you an optimal answer. It also ignores health insurance costs- ACA subsidies for those not yet eligible for Medicare and Medicare premiums later.

I THINK the Kotlikoff program accounts for more of these factors, so it should get you closer to a true optimum.
I know his MaxiFi planner accounts for taxes, Medicare premiums, etc. I was under the impression that Maximize My Social Security is pretty strictly Social Security analysis, but I could be wrong. Can anybody confirm either way?
I have used both of Kotlifoff's programs, MaximizeMySocialSecurity, and ES Planner (the stand-alone version of the online MaxFi). I can confirm that ESPlanner does account for taxes, while MaximizeMySocialSecurity does not.

By the way, thank you Mike Piper for providing an awesome resource to the community in your opensocialsecurity.com web site. You should be commended for your generosity!

Wrench
Thanks for clearing that up. I somewhere got the idea that Maxifi Planner simply incorporated the stand alone Social Security program.

Completely agree we should all thank Mike Piper for OSS. A great tool for investigating the effects of claiming strategies.
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Re: Social Security Claiming Strategy - Best Calculator?

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It seems like a major disadvantage to NOT drawing SS at 62 is the opportunity cost of spending your retirement savings sooner and leaving a smaller inheritance to your children. Not sure if any of these calculators consider this.

My intention was for both my wife and I to draw as early as possible to reduce dipping as much into our IRAs.

Am I missing something or does drawing later not really just deplete your savings sooner, thus negating the extra payments?
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Re: Social Security Claiming Strategy - Best Calculator?

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drhoda wrote: Tue Aug 18, 2020 3:34 pm It seems like a major disadvantage to NOT drawing SS at 62 is the opportunity cost of spending your retirement savings sooner and leaving a smaller inheritance to your children. Not sure if any of these calculators consider this.
Any calculator that is doing an NPV calculation (including Open Social Security, Maximize My Social Security, Social Security Solutions, and probably several others) does account for the foregone investment returns that result from spending down the portfolio faster in order to delay.
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Re: Social Security Claiming Strategy - Best Calculator?

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drhoda wrote: Tue Aug 18, 2020 3:34 pm It seems like a major disadvantage to NOT drawing SS at 62 is the opportunity cost of spending your retirement savings sooner and leaving a smaller inheritance to your children. Not sure if any of these calculators consider this.

My intention was for both my wife and I to draw as early as possible to reduce dipping as much into our IRAs.

Am I missing something or does drawing later not really just deplete your savings sooner, thus negating the extra payments?
Yup. You are missing something.

"Social Security, and the decision to delay benefits represents a unique form of “investment” – a return that is contingent not upon interest rates or market performance, but survival and longevity. Of course, it’s worth noting that because the value of the Social Security delay decision is contingent on how long someone lives, it is clearly not beneficial for those who are in poor health or are otherwise not optimistic about living a long time (though be certain to look at joint health and longevity in the case of couples planning for survivor benefits, not to mention other couples-specific strategies like File-and-Suspend that may further impact timing decisions).

Nonetheless, the decision to delay Social Security can be evaluated based on the implicit rate of return it creates by choosing to delay, and over longer time horizons – when clients may “need the money most” as they have more years of retirement expenses to cover in the first place – the return of the Social Security delay becomes quite compelling. In fact, the return is generally far superior to any risk-adjusted returns that can be achieved over comparable time periods by the available alternatives, whether investing in risk-free bonds, growth equities, or buying a commercially available annuity. And because the system is indexed to inflation, its real returns will be maintained even if inflation rises, and will only become better if longevity continues to increase as well. In fact, ultimately the decision to delay Social Security delivers the best results when there is either unexpected inflation, unusually long longevity, or especially bad market returns, which are the exact three scenarios that traditional portfolios are the least effective at managing, making the decision to delay Social Security the ultimate form of “anti-fragile” triple hedge!"

https://www.kitces.com/blog/how-delayin ... y-can-buy/
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Re: Social Security Claiming Strategy - Best Calculator?

Post by #Cruncher »

drhoda wrote: Tue Aug 18, 2020 3:34 pm It seems like a major disadvantage to NOT drawing SS at 62 is the opportunity cost of spending your retirement savings sooner and leaving a smaller inheritance to your children. ... My intention was for both my wife and I to draw as early as possible to reduce dipping as much into our IRAs.
In many cases delaying SS until age 70 lets you actually spend more beginning at age 62 than if you claim at age 62. Consider the following example [1] which compares claiming at age 62 or at age 70 where it's desired to take a $1 million portfolio at age 62 and spend it down to $100,000 at age 90. It assumes a constant 0% annual real growth rate. If one starts SS at 62 only $53,100 of annual spending is supported, including $21,000 of SS from age 62 to 90. But by delaying to age 70 one can spend $58,700 ($5,600 more) every year starting at age 62, including $37,200 SS from 70 to 90. This is despite the portfolio value falling $213,000 more at age 70 ($530,000 versus $743,000) when one delays.

Code: Select all

Row            Col A      Col B     Col C
  1      Growth rate       0.0%
  2  Portfolio at 62  1,000,000
  3   Desired legacy    100,000
  4           At age         90
  5      Start SS at         62        70
  6       SS benefit     21,000    37,200 [2]
  7  Annual spending     53,143    58,714  <== $5,571 higher!
  8  Portfolio at 70    742,857   530,286
  9  Portfolio at 90    100,000   100,000
To use this little spreadsheet with a different growth rate or other assumptions, Select All, Copy, and Paste [3] the following at cell A1 of a blank Excel sheet.

Code: Select all

Growth rate	0
="Portfolio at "&B5	1000000
Desired legacy	100000
At age	90
Start SS at	62	70
SS benefit	21000	37200
Annual spending	=PMT($B1,$B4-B5,-$B2,$B3,0)+B6	=IF(B1=0,(B2-B3+C6*(B4-C5))/(B4-B5),((B2*(1+B1)^(B4-B5)-B3)*B1+C6*((1+B1)^(B4-C5)-1))/((1+B1)^(B4-B5)-1))
="Portfolio at "&C5	=FV($B1,C5-B5,B7-B6,-$B2,0)	=FV($B1,C5-B5,C7,-$B2,0)
="Portfolio at "&B4	=FV($B1,$B4-$C5,B7-B6,-B8,0)	=FV($B1,$B4-$C5,C7-C6,-C8,0)
  1. Cut-Throat makes the same case using the Safe Withdrawal Rate (SWR) approach in his 2012 post, Delay Social Security to age 70 and Spend more money at 62.
  2. This assumes a $30,000 Primary Insurance Amount at age 67 with 70% payable if claimed at age 62 and 124% if claimed at age 70. This is the case for someone born 1960 or later according to the last row on this SSA webpage.
  3. If you have trouble pasting, try "Paste Special" and "Text".
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