Dear Dr. Don,
You said you would wait until you were 70 to collect Social Security because you were concerned about your retirement income in your 80s and 90s. You’re joking, right? What makes you so sure you’re going to see 80 or 90? I mean, really, do you have a crystal ball or is the government asking you to give out that sort of advice?

I say retire and file for Social Security as soon as you can, if you can afford it, cause you might be dead tomorrow.
— Joe Jumble

Dear Joe,
I’m no shill for the government. You’re right, either of us might be dead tomorrow, but if you’re 62 and married to a spouse who’s also 62, there’s a roughly 41 percent chance that one of you makes it to age 90. It’s those later years that make you wish you were the ant instead of the grasshopper and had waited to start receiving Social Security retirement benefits. The combination of the higher monthly benefit and the larger base qualifying for cost of living adjustments makes it an attractive option to delay if your finances allow it.

Taking retirement benefits at age 62 reduces your monthly retirement benefit from 20 percent to 30 percent, depending on your full retirement age. Spousal benefits taken at age 62 are reduced from 25 percent to 35 percent, depending on the spouse’s full retirement age.

According to the Social Security electronic fact sheet on when to start receiving retirement benefits: “If you live to the average life expectancy for someone your age, you will receive about the same amount in lifetime benefits no matter whether you choose to start receiving benefits at age 62, full retirement age, age 70 or any age in between.”

So on average, there’s no advantage to taking benefits early or to waiting to start benefits. Since I’m more concerned about longevity risk than I am about the risk of dying early and not receiving Social Security payments, I’m planning to capture those delayed retirement credits. You feel differently. That’s OK. It’s why they call it personal finance.

The break-even point between taking benefits at age 70 versus taking benefits at your full retirement age is about age 81½ (ignoring inflation adjustments). Before that point, starting retirement benefits at full retirement age is preferred. Past that point, delaying retirement until age 70 is preferred. It’s only at the break-even point that you receive the same dollar amount in benefits.

A joint life mortality table shows an 83 percent chance that either you or a spouse is still with us at age 81. Since survivor benefits reflect the additional credits for delayed retirement, waiting to start receiving Social Security retirement benefits can have a major impact on the survivor. However, spousal benefits don’t include any bump for delayed retirement credits. They max out at 50 percent of a worker’s full retirement age benefits, except for future cost of living adjustments, or COLAs.

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