In a financial-planning.com article (September 2010) by Donald J. Korn entitled The 8% Solution he suggests that patience is a virtue. Waiting from age 66 until age 70 to take social security means that you will have to wait until your mid-eighties to "break-even". But the break-even decision is not the only factor. Other factors besides health issues:
If you are married, "...it's the joint life expectancy that's relevant..." because delaying benefits "...commonly increases a widow's pension substantially..." (Michael Kitces).
If you liquidate low-yielding assets "...in order to get a higher-yielding asset..." (Eric Wikstrom), then that may make sense. Each year you wait, from age 66 to age 70, the social security annuity payment increases 8%. Inflation adjustments could add even more to that monthly amount.
"...Inflation also affects the break-even point...moving the assumed rate of inflation from 1.5% to 4.5% can cut the break-even period in half..." (Michael Kitces)
Finally, another factor to consider, is taxes. The maximum amount of social security that will be taxed is 85%, so "...at least 15 cents is tax-free...studies have shown that taxation magnifies the advantages of delayed claiming of Social Security..."
Delaying from 62 to your normal retirement age may be advantageous, but delaying until age 70 should be considered thoughtfully.
An Introduction
Hi. Welcome to BourGroup and my blog. Phil
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.
Phil Bour is a CERTIFIED FINANCIAL PLANNER(tm) professional since 2004, a Magna Cum Laude college graduate and an accounting professional for over 35+ years. I love numbers, statistics and economic history.
I am also an Enrolled Agent (EA) to represent taxpayers before the Internal Revenue Service and to prepare tax returns.
"Phil"osophy: I believe that you can manage your money on your own (not necessarily through individual stock selection but through mutual funds, ETF's and other solutions) once you receive some one-time, professional guidance. Why pay annual fees when there may be little added value? For additional information, first read the "An Introduction" label at the left. Then move on to others.