Social Security example - Am I missing something?

I just started reading a book about planning for retirement.


Early on, the author explains that it is best to delay taking Social Security as long as possible, even waiting until after you have been retired for a fairly long period before receiving SS.

He does provide a couple of strategies for weathering this period - work part time, or set up a “bridge” payment fund from your existing 401k.

Sounds reasonable so far. But then he gives an example to illustrate why delaying SS benefits is a no-brainer. The example left me scratching my head.

In very simple terms:

“Bob” decides to retire at 65 but not receive SS until age 70. If Bob elected to receive SS at 65, he would receive $25,000 per year. Waiting until 70 will give him $35,000. Therefore, Bob is gaining an extra 10k per year.

What the author totally ignores, though, is the 125k Bob would have received over those 5 years.

To my mind, delaying until age 70 would only pay off if Bob lives until at least 82.5 years of age, at which point he would “break even”.

Two questions:

  1. Is my math correct?
  2. Shouldn’t the author have raised this point?

I am not necessarily saying this is not the best strategy; just that it’s not as cut-and-dried as it is being presented.


I initially wrote a reply saying that of course the author should have mentioned this. If your health is in a downward spiral and you know you aren’t going to make it to your 80s, then taking SS earlier makes sense.

However, I checked the preview on Amazon, and it appears that the author addresses this issue in Chapter 9, “If You’re in Poor Health.” But even there, he hedges and says, “After all, you never know—you might end up living a long time!”

It looks to me like the whole thrust of the book is that you should assume you’re going to live as long as Methuselah and plan accordingly, even if you’ve got one foot in the grave already.

Is 82.5 as a break even point that absurd? I just used the life expectancy calculator from the SSA and right now I’m at 81.7 years. But the older you get, the longer your expected life. By 62 it says I’ll live to 84.8, and by 70 it says 86.9.

Obviously it’s a gamble, but if it’s more likely than not that I live past 82.5, it doesn’t seem like a stretch to assume a default position of delaying as long as possible.

The calculation is unique for every individual and depends on many variables, not least of which is how long you expect to live.

I delayed my state pension for a few years because my parents and grandparents all lived into their 90s. My wife, whose parents did not make 70, would make a different decision.

Another theory is to collect it and invest it if you can. There are a lot of options to play with and you need to figure out what is best for you.

And when you expect to spend money. I expect I’ll be traveling more, etc., between 60 and 70 than later on. I know I might need money for long term care stuff as I age, but that’s more fixed and I got that covered.

I think I’ll start drawing SS around 65.

The right answer as when to take SS is it depends. I’ll give to extremes:

You are 60 years old and you’ve never had a major illness. All your life you’ve eaten a healthy diet, got regular exercise, regular restful sleep. You’re blood pressure is in the good range. In your family history both your parents and your grand parents all of them lived into their nineties. You’ve gotten regular tests and check ups and always came out with good scores. You are happy and married and have a supportive family. You live in an area that provides quality health care for the elderly. And you have a lot of savings for just in case.

Then yes, definitely wait until you are 70 to collect SS.

OTOH there is me. I’m also 60 years old. My weight is over 350 pounds and I’m 5’6’’ tall. I have a poor diet and I never exercise and I have no intention of changing that. I have serious diabetes. I’ve already had a heart attack and also a stroke. My parents and grand parents, all of them, died in their 50’s and early 60’s from strokes and heart attacks. Even worse my family members have a history of dementia. My blood pressure is through the roof. I can’t work and I’m broke. Also I have been a heavy drinker all my life and since I was twelve I’ve been smoking two packs of cigarettes a day.

Absolutely, definitely, I should take SS at the earliest possible moment.

Okay, these examples are extreme but it’s to make the point. What I recommend you do to get the best answer to your question is find an actuary or some website you can plug in all the factors and see what answer you get.

Don’t just look at the average age or mean age that is calculated for you. Definitely look at the bell curve. The bell curve will give you a better idea of what you can expect. I guarantee that the bell curve for me will be shaped differently than yours. For me, the chance of me making it to 82 is incredibly small. For you, odds are not so bad.

(BTW, if you care, I’m not all those things I listed in my example).

Oddly, I do somewhat care about posters I do not know, never met and do not even remember the posting names of (I am really bad at that). Some poster was quitting smoking and I was really rooting for him, even though I do not remember even who he was. Weird, I know.

It’s easy to see that there is a trade off between collecting early and late: Starting later, you receive more each month but you miss collecting for all those earlier years.

Which is better depends on your personal circumstances, as has been discussed.

From the government’s point of view it makes no difference. Their actuaries have worked out the math so that, on average, they pay the same total amount

You and a few others are missing my point.

Which is this: The author omitted a major part of the equation by failing to consider the “lost” months of SS you are sacrificing by waiting to draw. It is not mentioned, not even in passing.

And I wonder if he did this intentionally in order to bolster his advice.


True, but if people make bad choices the government might benefit. If every healthy person takes early and every ill person delays the fund won’t be depleted as much as if everyone took it at 66.
And I wonder how much got saved from the increased death rate due to Covid.

Which might or might not work. Delaying getting SS is like an 8% return rate, inflation adjusted, guaranteed. You might do better than that investing, but not basically risk free.

You may be right. The only GQ answer is yes, your math is right. Whether or not the author’s example was sufficiently complete is IMHO territory. To me, the missing 5 years of SS income are self evident, but the way you describe it does seem like it’s not a particularly well written section.

The best measure of how long that you are likely to live is your grandparents, not even your parents. If they lived to a ripe old age then you are also likely to. Your personal lifestyle then either adds to that probability or subtracts from it. It helps to take care of yourself but it will not overcome the genetics.

Genetics mean a lot, more than people realize. Chose your grandparents carefully.

Your Social Security pay out is based on your highest earnings for a period of 35 years. So try to do well during your midlife most productive years. You can only slightly improve the pay out by continuing to work and pay into the fund when you are older. The 35 highest earning years will be what is used to determine your monthly check, and by the time you get to thinking about retirement, those 35 years are behind you.

So if your grandparents had a long life, if you made a decent living during your most productive years, then it is up to you to gamble by waiting to collect at 70. If you are still reasonably able to work and like to continue working, then wait until full retirement age to collect.

But there are many people who don’t fall into these categories who should just start collecting early benefits at 62.

It is a personal calculation that no one else can really make for you.

Two of my four grandparents died unnatural deaths by some kind of foul play. So I don’t have much real data to judge my own risk.

You can make yourself a simple spreadsheet or use an online calculator, but those missing months are indeed accounted for. My own breakeven point from either beginning at 66.3 or waiting until 70 is just shy of 80 yrs old. That takes into account the missing years.

I started collecting at 62, and those few early years got me through a rough period, financially. I know I’m getting a reduced amount now, but I have no regrets.

If you are married and were the high earner in the marriage in the unfortunate event of your early demise your spouse’s social security benefit will be supplemented up to the rate you were collecting. They don’t get their benefit plus yours, they get their benefit first, and then enough of yours to bring them up to your rate.

So if they were getting $1,200/month because they were low earners and collected early and you were getting $3,000 because you waited when you die your spouse starts collecting their own $1,200 plus an additional $1,800 from your benefit.

You need to take spousal benefits and life expectancy into account.

Just went through this recently. Some very handy resources here:

If that’s what the author said, he is simplifying to the point of uselessness. Not only does he seem to be ignoring the five extra years of payments, he also seems to be ignoring the time value of money for those five extra years of payments. The extra $125,000 could be invested to earn some return that makes early payments worth even more than bigger later ones.

Solving for when to collect Social Security is not easy. In part, this is because there are so many options (particularly if you are married and your spouse also worked) and in part because it depends on three key unknowns: the rate of growth of Social Security payments; your investment rate of return; and when you (and your spouse) are going to die. Good luck guessing all of those things with perfect precision. The best you can do is make reasonable assumptions, decide how much risk you are willing to take that you are wrong, and do the best you can.

For what it’s worth, I just threw a simple spreadsheet together, compared my starting Social Security at 67 vs. 62 (where I would collect 70.4% of the benefits from day 1), and assumed social security benefits increase 2% per year, and investments grow at 5% per year. Delaying Social Security for five years takes 21 years and 2 months to break even. If I can earn 4% on my money instead, the breakeven point is 19 years and 5 months. But today’s 10-year Treasury notes are only yielding 1.6%, so the breakeven point would come even sooner than that.

But there are other factors that come into play as well. Many people want to do Medicaid planning to spend down their assets in case they end up in a long term care facility. Others want to maximize the amount of the estate they pass to their heirs. It’s all bewildering.

Good luck!