Still Working - Do I draw SS at Full Retirement Age or Wait until 70?

[TeriE401022]

I will reach full retirement age in about 6 months. I'm still working full time at a job I thoroughly enjoy and am in very good health. My social security benefits at 66.5 is approximately $2700 monthly and will increase $800/month if I wait until age 70. I plan to work until 70 regardless.

I've been advised by a consultant at Edwards Jones to start drawing at full retirement age and investing the $2700 until I retire at 70. (42 months X $2700 = $113,400) not counting the dividends (appoximately 6%). In theory that sounds great, but when I quit working my social security check will still be $800 less per month.

Would love some opinions and/or advice.

[sktn77a]

I would expect nothing less than an "investment advisor" to tell you to take your money early and hand it over to him so that he can bill you for "assets under management"!  Ask him if he will guarantee you an 8% return on your investment with him with absolutely zero risk.  As far as the government welching out on this deal, I think we all have more chance of nuclear armageddon that that!

[LeeS4949]

I wouldnt wait a second longer than necessary. Any longer and you are putting excess trust in the government. Best of luck with that.

[Tonster521]

@TeriE401022 I am surprised that you have not received more replies. Your question regarding when to start SS Benefits (SSB) is asked often. And, there are probably many opinions. The short answer is starting SSB at Full Retirement Age (FRA) or delaying to Age 70 are actuarial equivalents based on average life expectancy and a discount rate of approximately 3%. The SSA advises that the average life expectancy based on their Mortality Statistics will be between ages 83 and 84. However, that is based on gender neutrality. Because males and females have their own average life expectancy, there may be an advantage for folks (especially females) in very good health to delay their SS Benefits. However, that advantage is reduced if folks are able to obtain returns greater than 3% which is the current situation. Since you are working with an Edward Jones consultant, I suggest he or she create several bond ladders so you may determine how long you will need to live to recoup and exceed the money ( SSB and returns/interest) that you are considering to forgo for 42 months in order to receive $800 more per month at age 70. The future value of $2700/month at 3% for 3.5 years is approximately $117,846. So, at $800/month, it will take you about 147 months to recoup or about 12 years and 3 months or age 82.25. At 4% for 3.5 years, you will accumulate approximately $119,363. It will take you about 149 months to recoup or about 12 years and 5 months or age 82.43. Your consultant should be able to project exact amounts and the time it will take to recoup the loss you will incur should you elect to delay SSB. I suggest you have the consultant develop a fixed income ladder using Treasuries, Agencies, CDs, and AAA/AA Corporates to reduce any risk. The consultant should be able to develop a ladder using the above securities in the the 5% range. Do not use mutual funds, exchange traded funds, closed end funds, etc. since their future values are unknown. Also, remember that comparing apples to apples, the accumulated value is only reducing at $800/month or $9,600/year. So, for example, using the 4% discount rate value, the $119,363 will only reduce $9,600 a year leaving about $109,763 to continue to earn interest. This will, in effect, continue to push the break even age further in time to ages in your mid to late 80's. I am sure the consultant can develop a fixed income ladder greater than 4%. For example, current Treasury Bills, 1 year and less, are paying around 5%. The 2 year Treasury note is hovering around 5% and many brokered CDs, out to 5 years, are paying around 5%. Unless you have a very young spouse who is depending on SS Survivor Benefits upon your death (you do not have separate life insurance), it would be hard for me to forgo about $120,000 over 3.5 years. Of course, you need to save and invest the SSBs which would be, in effect, what you would be doing in the the SS Program by delaying. Hope this helps.

[nctarheel]

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@TeriE401022 wrote:

Would love some opinions and/or advice.

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I took Social Security early. Several factors weighed on my decision. First, almost none of my immediate relatives lived past 70-75. Second, I had a heart issue in my fifties. Third, in doing the math, taking Social Security early, getting it for those 48 to 50 months prior to being an age to qualify for full benefits.... if I waited for full benefits, I would be around 79-80 before I reached the break even point in total actual dollars received versus having received monies since age 62.

For myself, it was a matter of getting my money for AS LONG A TIME PERIOD as I can prior to pushing up daisies.

If all your relatives live to their 90's, if you are in excellent health mentally and physically, and you feel comfortable letting the government hold onto your money and possibly keeping it permanently if things DON'T GO YOUR WAY....... then, take the gamble and wait.

One final note, you would most likely be paying taxes on that increased income, so if you take the consultant's recommendation, your $2,700 won't really be $2,700.

[DeniseL768850]

I think the key is that you said you "thoroughly enjoy"and you're in good health and that 70 is the age for your retirement.    I'd say delay if that's the case if your are not burden financially.