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When should spouse draw SSI?

It seems very tempting to have my (low earning) spouse begin drawing social security (spousal) benefits at age 62--even though that comes with an 18% penalty for life. I have no doubt my logic is seriously flawed, but hear me out for a second.


I know that drawing at 62 means she would later forfeit about an additional $530/month, had she waited for FRA. But here's where my warped logic comes in--it would take 10 years of that higher payment to match the $60k she could draw from 62-67. And we could invest her monthly checks for further gains. So, it seems, like a pretty solid play through age 77. But I'm guessing that's where you tell me that we are then giving up about $63K from ages 77-87.


I apologize if my math is off and I don't understand the pay out rules correctly. (She would get .32 of my FRA benefit beginning at age 62 vs. .50 of it if starting at 67) So, what say you? I know "in the long run" it's a more profitable play to wait. But I'm also thinking the early cash boost might help us "do more" in our earlier retirement years. 


I'm sure many of you out there could school me up with more reasoned/correct thinking. Please do--and thanks in advance!


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I confused these for years before finding clarification via





Phil Harris, actor and showman, to John Fogerty of CCR: “If I’d known I’d live this long, I’d have taken better care of myself.”
Bronze Conversationalist

@Prestonator You posted a great question that is somewhat complex to answer without some knowledge of the time value of money as well as other factors such as Survivor Benefits, if applicable. I have heard many folks simply state that delaying SS benefits for 5 years to obtain a greater monthly benefit is better than starting at age 62. On a "nominal basis", it is. Using approximate benefit amounts such as $1,000/month currently (age 62) and a delayed amount such as $1,500/month in the future (age 67), it is clear that $1,500 is greater than $1,000. However, to compare these amounts on a "real basis" (not including a factor for inflation/cost of living increases), I would use the present value approach which takes into account the time value of money. You can also develop probabilities for a different life expectancy which is important, For purposes of providing a starting point, here are some numbers to review based on a life expectancy of age 87. First, using a discount rate of 3%, the present value of $1,000/month for 300 months (ages 62 to 87) is $211,004. Using the same 3% discount rate, the present value of $1,500/month for 240 months (age 67 to 87) is $232,977 or about $22,000 greater. Keep in mind that the $1,500.month cash flow starts 5 years later which means $0.00 for the first 5 years. So, there is a slight monetary advantage to delaying to age 67, but than advantage occurs much later in the time line. Another view is to look at the $22,000 advantage as an "average" over the 25 year life expectancy which is an average of $880.00 per year. Please note that the values will change based on a different discount rate and greater/lessor life expectancy. Another factor is the amount of Survivor Benefit that may become payable and when it become payable should you predecease your spouse. For the above calculations, you are both living at age 87. Hope this helps.

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