No. of Recommendations: 9
Spend down your barely adequate retirement account* for 8 years, planning on the headed-for-bankruptcy Social Security will pay you more later on.
Ignore the bit about that the difference in payments is designed to be actuarially neutral.
While you're at it, ignore the time value of money.A lot to unpack there. The two central questions of retirement planning are "how much do I need?" and "how much can I spend?" Your advice to just have lots of money works well enough for a few, but simply isn't actionable advice for most people. For most people--including many who don't need SS to retire comfortably--Social Security will provide a non-trivial amount of income in retirement. This reality affects answers to both of the central questions. Therefore, worth examining.
A quick aside: Retiring with more money means in order to avoid a busted retirement means working more years for most people. But if you work longer than you needed to, you still busted your retirement. Only you busted it at the beginning instead of the end.
SS is designed to be actuarily neutral if you live to be age 80.4. Life expectancy for males at age 70 is 83.7. Life expectancy for higher income educated people (which I assume is most of this board) is even higher than that. More important than the life expectancy of the cohort, is family history, of course. But if we're looking at the cohort of people on this board, delaying isn't close to neutral. There is a strong benefit to delaying. Taking early is betting against the odds.
Re: Time value of money. I'll defer to Kitces again. Delaying pushes the break even point out to about 84 (assuming a 6% real rate of return from a balanced portfolio). After that, the benefits of delaying crushes take early. The key though, is there is no market or inflation risk to delaying.
So again, if you don't think you'll live to 84, then probably shouldn't delay. Otherwise, delaying is strongly financially beneficial.
https://www.kitces.com/blog/how-delaying-social-se...And finally, what if the creek rise? There is no Congressman alive who would dare cut benefits for anyone currently receiving SS or will receive benefits in the next decade or so. Old people vote. Those who aren't receiving SS have parents or grandparents who do. No way will benefits be cut any time soon.
And the notion that SS will run out money to pay full benefits is a scare tactic created by corrupt politicians in order to advance a narrow political agenda. Congress has plenty of time to act, and if they don't there is nothing that says Social Security can't be paid out of general revenues. Again, they aren't going to cut anyone's payments or they would be wiped out in the next election.
