I was chatting with a friend & neighbor recently about Social Security.  Paul has just turned 65 and was thinking of jumping on SSI early (his full retirement age is 67).  He thought the advantage might be that he could get “locked in” to a benefit before the government potentially cuts back SSI benefits for wealthier households.

In thinking through the situation, I put together a little spreadsheet looking at my own projected benefits from the MySocialSecurity website.  It looks like my monthly benefit would grow by 7.5% each year by waiting from age 65 to 67 – offset by 2 years less payments upfront.  That’s probably close to a “push” for me.  Especially given that I don’t know how long I will be lucky enough to live. I’ve already had a bad heart attack, so taking SSI early may be a good idea.

That wasn’t a big surprise to me, but in the process of doing the math, I noticed that the numbers from the website didn’t match my own “retirement model” spreadsheet.  That’s the model I put together to project our retirement investments & spending.  The actual SSI benefit was higher than what I had noted.  Quite a bit higher.  Upon investigation, I noticed that I had made a number a of mistakes in my spreadsheet that far understated the actual benefit we should see.

First, I hadn’t included my wife’s Social Security benefit.  That was a  pretty basic mistake! I only had my benefit included.  Her benefit should be about half of what my benefit will be, since she was a stay-at-home Mom for many years.  That’s an extra 50% benefit right there.

On top of that, I had never adjusted the benefit from what it would have been in 2016.  SSI goes up every year with a cost-of-living-adjustment (+2.5% in 2025).  In fact, the CPI is up a whopping +33% since I retired in 2016, and will still keeping shooting higher.  I don’t get to age 65 for another 6+ years. That makes another big impact on the benefit we will receive.

These positives were offset by one negative in my spreadsheet.  Starting at age 65, I had our SSI benefit going up +3% a year for inflation.  I think that’s a bit too high.  I trimmed it to the Fed guidance of +2%.

When I update the math in my spreadsheet, our annual benefit from SSI more than DOUBLED.  All that extra income means at age 75 our projected net worth goes up substantially compared with.  How substantial?  Enough to at least buy a vacation condo in Florida – which we just did.  

(Keep in mind that we also rely on our Financial Advisor’s professional model in guiding our financial journey.  I’m sure his model doesn’t make the simple mistakes that I made.  That said, in almost nine years of retirement we’ve been regularly beating both models by a significant amount, so maybe his model is also programmed conservatively).

Additionally, now that we are past the election, Trump has gone on the record saying that he “will not be touching Social Security” as part of his efforts to cut government spending (Meet The Press, 12/8/24).  Additionally, he remains committed to “no tax on social security”, which could be politically popular to both parties as a legislative priority.  If those two promises are kept, we’re looking at another substantial opportunity for our retirement plan.  

Have you made any fundamental assumption changes to your FIRE plan?  What were they?

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