I went deep down the Social Security benefit timing rabbit hole this week.
I built a little spreadsheet to look at SSI lifetime benefit at different “start ages” and added in the value of taking SSI pre-age 67 and investing it. These are my currently projected benefits from the MySocialSecurity website.
I assumed a conservative 3% investment return on the early dollars.
You can see that there isn’t much difference in the lifetime benefit of the 4 start ages. It’s a little better for me financially to wait until age 70, but not much.
A 3% return on the invested dollars doesn’t seem particularly risky over this investment horizon. If you got a 8% return, you would wind up with $1,856K in total benefit under the age 62 start date. This leads me even more to want to get my hands on SSI earlier.
Anyone else taken benefits early and invested them? How did that turn out? Am I missing something in the analysis?
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MrFireStation 
Have you considered that up to 85% of SS benefits, depending on income, will be taxed?
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Yes – To simplify it, I left that out of the analysis as it would basically equally impact the SSI income and the investment income. (Unless Trump is successful in getting his “no tax on Social Security” proposal passed into law).
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I looked at my statement to compare receiving Social Security today versus waiting until I am 70. By waiting the payout increases 7.31% per year.
Receiving benefits earlier and reinvesting would require paying taxes on 85% of the benefits you receive. I bet Trump wins the non-taxability battle. My CPA neighbor raised the question, will phase outs remove the benefit of non-taxability?
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I’ll take that bet. I don’t see him getting the 60 votes he needs in the Senate. I think the Democrats will stonewall him – and the cost of the proposal may give some Republicans pause, as well.
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I agree with my CPA neighbor who says “government pretends to give their voters benefits and then takes them away via phase outs or means testing.” Government has become too big a part of our lives and we spend too much time figuring out ways to avoid the consequences of their dumb ass decisions.
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One tax benefit I’m hearing bipartisan support for is increasing the SALT deduction from $10K to $20K. That would benefit both of us, living in high tax blue states.
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