Anyone else shocked by the increase in their Social Security benefits?

[Turtle]

I was reading various sites during a slow workday, and finally decided to check out opensocialsecurity.com

Their recommendation was exactly the same as what I had worked out was the best option.  Go me.  :)

What a great thread!

I looked up my benefits and it says that I'll get X amount if I earn at least Y every year until I claim benefits. Can that be correct?  Is this telling me I have to keep working??

My particular situation has nothing to do with whether or not I ever earn another employment related dollar in my life, actually.

[oldtoyota]

I was reading various sites during a slow workday, and finally decided to check out opensocialsecurity.com

Their recommendation was exactly the same as what I had worked out was the best option.  Go me.  :)

What a great thread!

I looked up my benefits and it says that I'll get X amount if I earn at least Y every year until I claim benefits. Can that be correct?  Is this telling me I have to keep working??

My particular situation has nothing to do with whether or not I ever earn another employment related dollar in my life, actually.

That's cool! Great planning.

I was wondering about whether social security would really decrease each year I don't earn income until I decide to claim benefits. My estimated benefit decreased this past year, so I suppose that will continue and erode my monthly payment unless I earn a certain amount.

[tj]

I was reading various sites during a slow workday, and finally decided to check out opensocialsecurity.com

Their recommendation was exactly the same as what I had worked out was the best option.  Go me.  :)

What a great thread!

I looked up my benefits and it says that I'll get X amount if I earn at least Y every year until I claim benefits. Can that be correct?  Is this telling me I have to keep working??

My particular situation has nothing to do with whether or not I ever earn another employment related dollar in my life, actually.

That's cool! Great planning.

I was wondering about whether social security would really decrease each year I don't earn income until I decide to claim benefits. My estimated benefit decreased this past year, so I suppose that will continue and erode my monthly payment unless I earn a certain amount.

Go to http://ssa.tools and input your historical earning data you can see what working each additional year accomplishes.

Spoiler: It's a tiny fraction compared to additional $$$ from additional years of salary.

[SpareChange]

Checked my estimated benefits and SS in the last week or so has updated them for the newest AWI. Just over a 5% increase. I'll take it.

It's that time of year again...not quite as big an increase, but still nice. If I put in 0 for future earnings the yoy increase is about 4.25% at 62 for me.

[mistymoney]

Checked my estimated benefits and SS in the last week or so has updated them for the newest AWI. Just over a 5% increase. I'll take it.

It's that time of year again...not quite as big an increase, but still nice. If I put in 0 for future earnings the yoy increase is about 4.25% at 62 for me.

Thanks for keeping an eye on this! I just checked last week or so ago and nothing. finally updated! And it is a nice bumb too.

So excited to update the spread sheet :)

[mistymoney]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

[SpareChange]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

$116 for me. It's reassuring that my benefit at 70 is staying ahead of my annual expenses. I think my earnings this year will add close to another $79/mon. Sweet.

[mistymoney]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

$116 for me. It's reassuring that my benefit at 70 is staying ahead of my annual expenses. I think my earnings this year will add close to another $79/mon. Sweet.

I've been guesstimating on that one too, but this col adjustment is definitely the largest piece of it. I have only 2 years of earnings to add to the pot (2024 and 2025) so seeing it get to be a more significant chunk of the estimated budget is very welcome.

[Dicey]

I just hit FRA. If I collect now, it will be about $3100/month. If I wait until 70, it will be almost $4k/month. What to do, what to do?

[secondcor521]

I just hit FRA. If I collect now, it will be about $3100/month. If I wait until 70, it will be almost $4k/month. What to do, what to do?

If it's a serious question, I think highly of https://opensocialsecurity.com.

[SpareChange]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

$116 for me. It's reassuring that my benefit at 70 is staying ahead of my annual expenses. I think my earnings this year will add close to another $79/mon. Sweet.

I've been guesstimating on that one too, but this col adjustment is definitely the largest piece of it. I have only 2 years of earnings to add to the pot (2024 and 2025) so seeing it get to be a more significant chunk of the estimated budget is very welcome.

My bad...increase is $87 at 70, not $116. Still nice, but I'll trade ya :p. $2116 is the new benefit at 70 lol. I still have several zeroes on my record. Doubt I'll fill in all of them but I might get close. You probably have a really good idea of what your final benefit will look like at this point.

[jim555]

Just checked, mine went up 4.4% from the last statement.  I have no wage income for the last year.

[mistymoney]

Just checked, mine went up 4.4% from the last statement.  I have no wage income for the last year.

wage based increases come out in february, this was just the inflation adjustment.

[mistymoney]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

$116 for me. It's reassuring that my benefit at 70 is staying ahead of my annual expenses. I think my earnings this year will add close to another $79/mon. Sweet.

I've been guesstimating on that one too, but this col adjustment is definitely the largest piece of it. I have only 2 years of earnings to add to the pot (2024 and 2025) so seeing it get to be a more significant chunk of the estimated budget is very welcome.

My bad...increase is $87 at 70, not $116. Still nice, but I'll trade ya :p. $2116 is the new benefit at 70 lol. I still have several zeroes on my record. Doubt I'll fill in all of them but I might get close. You probably have a really good idea of what your final benefit will look like at this point.

I have the full 35 years, unfortunately!

But in 2024 and 2025 will be replacing very low earning years with much higher earnings. my estimate is that the 2024 earnings will up the benefit about $57 a month.

[jim555]

Just checked, mine went up 4.4% from the last statement.  I have no wage income for the last year.

wage based increases come out in february, this was just the inflation adjustment.

There are two adjustments depending on your age.  The AWI (average wage index) is used before you are eligible for SS, that was 4.4%.  The CPI COLA is for those getting SS, that was 2.5%.

[mistymoney]

Just checked, mine went up 4.4% from the last statement.  I have no wage income for the last year.

wage based increases come out in february, this was just the inflation adjustment.

There are two adjustments depending on your age.  The AWI (average wage index) is used before you are eligible for SS, that was 4.4%.  The CPI COLA is for those getting SS, that was 2.5%.

oh - will we stay on the awi until claiming even if at 70? Or would it switch to the cpi cola at FRA?  or earlier?

[secondcor521]

Just checked, mine went up 4.4% from the last statement.  I have no wage income for the last year.

wage based increases come out in february, this was just the inflation adjustment.

There are two adjustments depending on your age.  The AWI (average wage index) is used before you are eligible for SS, that was 4.4%.  The CPI COLA is for those getting SS, that was 2.5%.

oh - will we stay on the awi until claiming even if at 70? Or would it switch to the cpi cola at FRA?  or earlier?

From what I read on another board, it's AWI up to about age 60 and CPI after 62, regardless of when you claim.  There are two years in there where neither are applied.

[mistymoney]

Just checked, mine went up 4.4% from the last statement.  I have no wage income for the last year.

wage based increases come out in february, this was just the inflation adjustment.

There are two adjustments depending on your age.  The AWI (average wage index) is used before you are eligible for SS, that was 4.4%.  The CPI COLA is for those getting SS, that was 2.5%.

oh - will we stay on the awi until claiming even if at 70? Or would it switch to the cpi cola at FRA?  or earlier?

From what I read on another board, it's AWI up to about age 60 and CPI after 62, regardless of when you claim.  There are two years in there where neither are applied.

wait - what? It is frozen when you are 60 until 62??

[mistymoney]

what if you still working?!!

[MrGreen]

what if you still working?!!

AWI increases cease two years before eligibility, so the AWI at 60 becomes the permanent wage figure regardless of whether one continues to work.

[mistymoney]

what if you still working?!!

AWI increases cease two years before eligibility, so the AWI at 60 becomes the permanent wage figure regardless of whether one continues to work.

wow, that is a complete let down!

I'm crushed!

[MrGreen]

what if you still working?!!

AWI increases cease two years before eligibility, so the AWI at 60 becomes the permanent wage figure regardless of whether one continues to work.

wow, that is a complete let down!

I'm crushed!

To clarify, that's just the figure used to adjust previous year's earnings for inflation. You can still earn income that will increase your monthly Social Security check.

[Dee18]

Dicey- When I was at FRA I read a study that said if you go ahead and take SS at FRA and invest what you don't need you will probably come out ahead.  Part of what I liked about taking it then was having my medicare payments taken out of my SS, although I realized that was not a financial based reason to take it.

[jim555]

what if you still working?!!

AWI increases cease two years before eligibility, so the AWI at 60 becomes the permanent wage figure regardless of whether one continues to work.

wow, that is a complete let down!

I'm crushed!

I turn 60 in 2025 and my statement went up by 4.4% so I am kind of confused on how this all works.

[MrGreen]

what if you still working?!!

AWI increases cease two years before eligibility, so the AWI at 60 becomes the permanent wage figure regardless of whether one continues to work.

wow, that is a complete let down!

I'm crushed!

I turn 60 in 2025 and my statement went up by 4.4% so I am kind of confused on how this all works.

The Average Wage Index runs two years behind. So for next year, the 2023 AWI was just released, which is 4.43% higher than 2022. So your increase in benefits tracks that perfectly. Since you turn 62 in 2027, the 2025 AWI (released in two years) will become the set-for-life value to which all your previous year's wages will be adjusted against. Any future inflation adjustments to your benefit will have to come via the COLA adjustment.

Edit: corrected wrong year typo

[mistymoney]

So - I was just checking social security - but they don't have my 2024 wages recorded as yet - said 0. Not a surprise, just wishful thinking cuz I want to see it....

But in looking at my benefits if 0 earned going forward and the monthly amounts are up roughly 40/month.  Did I record these wrong in November? I don't seem to have saved a statement in November, so can't compare.

Anyone else notice anything? or know of what the change might be from?

[secondcor521]

So - I was just checking social security - but they don't have my 2024 wages recorded as yet - said 0. Not a surprise, just wishful thinking cuz I want to see it....

But in looking at my benefits if 0 earned going forward and the monthly amounts are up roughly 40/month.  Did I record these wrong in November? I don't seem to have saved a statement in November, so can't compare.

Anyone else notice anything? or know of what the change might be from?

Probably the AWI indexing.  At some point each year, they put the next year's AWI into their system, which makes your past earnings history more valuable and thus your SS benefit goes up.

I don't know when they do that each year.  I periodically check my SS benefit and it does go up twice a year - once when my next year's earned income shows up, and one other time.  I forget when those bumps happen; since I'm 14 years away from collecting I don't pay that close of attention.

[SpareChange]

So - I was just checking social security - but they don't have my 2024 wages recorded as yet - said 0. Not a surprise, just wishful thinking cuz I want to see it....

But in looking at my benefits if 0 earned going forward and the monthly amounts are up roughly 40/month.  Did I record these wrong in November? I don't seem to have saved a statement in November, so can't compare.

Anyone else notice anything? or know of what the change might be from?

Probably the AWI indexing.  At some point each year, they put the next year's AWI into their system, which makes your past earnings history more valuable and thus your SS benefit goes up.

I don't know when they do that each year.  I periodically check my SS benefit and it does go up twice a year - once when my next year's earned income shows up, and one other time.  I forget when those bumps happen; since I'm 14 years away from collecting I don't pay that close of attention.

February for previous year's income. November for AWI increase.

[SpareChange]

So - I was just checking social security - but they don't have my 2024 wages recorded as yet - said 0. Not a surprise, just wishful thinking cuz I want to see it....

But in looking at my benefits if 0 earned going forward and the monthly amounts are up roughly 40/month.  Did I record these wrong in November? I don't seem to have saved a statement in November, so can't compare.

Anyone else notice anything? or know of what the change might be from?

Yeah, when I do that my numbers have changed too, but not by my expected benefit change based on last year's earnings. Hmmm....

[GilesMM]

Dicey- When I was at FRA I read a study that said if you go ahead and take SS at FRA and invest what you don't need you will probably come out ahead.  Part of what I liked about taking it then was having my medicare payments taken out of my SS, although I realized that was not a financial based reason to take it.

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

[Ron Scott]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

$116 for me. It's reassuring that my benefit at 70 is staying ahead of my annual expenses. I think my earnings this year will add close to another $79/mon. Sweet.

FWIW, if you retire 4 months before your 70th you get enough money to take a nice vacation and the few dollars difference in monthly benefits going forward will take until your 86 to break even.

[SpareChange]

Dicey- When I was at FRA I read a study that said if you go ahead and take SS at FRA and invest what you don't need you will probably come out ahead.  Part of what I liked about taking it then was having my medicare payments taken out of my SS, although I realized that was not a financial based reason to take it.

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Might not apply in your situation, but one of the reasons taking it at 62 doesn't currently appeal to me is that it might negatively interact with ACA premium subsidies. Of course, that's a long way off for me so who knows how the variables will change.

[flyingaway]

The usual claim strategy for a couple is for the lower level one claims as early as possible, and the higher level one claims as late as possible. But it gets complicated when ACA and Roth conversion enter into the discussions. It might also be different for a single person. Nothing is perfect and no shoes fit all people. 

[Ron Scott]

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Interesting.

What calculators do you use and what assumptions are you making about taxes, spending, investments, and timing trade-offs (62 vs. 70?)?

[GilesMM]

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Interesting.

What calculators do you use and what assumptions are you making about taxes, spending, investments, and timing trade-offs (62 vs. 70?)?

https://opensocialsecurity.com/  Defaults.

[tj]

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Interesting.

What calculators do you use and what assumptions are you making about taxes, spending, investments, and timing trade-offs (62 vs. 70?)?

https://opensocialsecurity.com/  Defaults.

interesting. Typically Open SS recommends significantly older than 62.

[mistymoney]

So - I was just checking social security - but they don't have my 2024 wages recorded as yet - said 0. Not a surprise, just wishful thinking cuz I want to see it....

But in looking at my benefits if 0 earned going forward and the monthly amounts are up roughly 40/month.  Did I record these wrong in November? I don't seem to have saved a statement in November, so can't compare.

Anyone else notice anything? or know of what the change might be from?

Yeah, when I do that my numbers have changed too, but not by my expected benefit change based on last year's earnings. Hmmm....

Interesting! Thanks for checking and reporting back.

I'd say mine was kinda sorta in the ballpark I was expecting. But I already wiped out the old numbers in the spreadsheet, and only have the claim at 70 number from the November figures.

Let's see what happens in February. I've kind of convinced my self this is the increase from 24 income and somehow they did that update before queuing up the income for the statements.

We will see!

[mistymoney]

Dicey- When I was at FRA I read a study that said if you go ahead and take SS at FRA and invest what you don't need you will probably come out ahead.  Part of what I liked about taking it then was having my medicare payments taken out of my SS, although I realized that was not a financial based reason to take it.

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Might not apply in your situation, but one of the reasons taking it at 62 doesn't currently appeal to me is that it might negatively interact with ACA premium subsidies. Of course, that's a long way off for me so who knows how the variables will change.

One of the things that has me determined to not claim until 70 is the 15% of soc security that is not subject to income tax. I want to maximize my lifetime exposure to that money!

If they take that away from me, I will cry bitter tears of recrimination!

[mistymoney]

wow! my monthly benefit at 70 went up by over $150!

super pleased!

$116 for me. It's reassuring that my benefit at 70 is staying ahead of my annual expenses. I think my earnings this year will add close to another $79/mon. Sweet.

FWIW, if you retire 4 months before your 70th you get enough money to take a nice vacation and the few dollars difference in monthly benefits going forward will take until your 86 to break even.

no one here is retiring at 70, or 69 either! Everyone has enough money to take a nice vacation at any time they might choose to do so.

And enough money to delay taking soc sec til 70 if they choose that route for longevity insurance.

[Ron Scott]

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Interesting.

What calculators do you use and what assumptions are you making about taxes, spending, investments, and timing trade-offs (62 vs. 70?)?

https://opensocialsecurity.com/  Defaults.

Really?

When I used the default on your calculator (just pressed submit) I got 65 years and a month as best, attached. (When I simply changed the default date to 1956, instead of 1960, I got an even later age: 68 years, 3 months.) This seems to contradict your 62 as best.

And in this interview with Christine Benz, Michael Piper (the author of your calculator) recommends claiming at 62 only for single people in poor health or, in some cases, for the lower earning partner in a marriage, so.

https://www.morningstar.com/portfolios/when-is-right-time-file-social-security-benefits

Here’s his key message, in his own words, from the interview linked above:

”For a single person in average health even, it typically makes sense to file anywhere from age 68 to 70, and that's purely looking at it actuarially. So, we're not accounting for the fact that it's usually advantageous from a tax standpoint to delay benefits. It's also not accounting for the fact that delaying benefits is helpful from a risk-reduction standpoint because you're getting longevity risk protection when you delay benefits. So, for a single person in better-than-average health, yes, it almost always is going to make sense for that person to wait until 70.”

I personally agree with Piper.

[mistymoney]

Could be giles is including keeping more money in the market for those 8 years. Which was my original plan as well.

But after digging into all the benefits from delaying social security - such as the 15% or more that is tax free, and the ability to spend down more from pretax/convert to roth to avoid the tax bullet when getting to rmds - made more sense to me to delay.

[MaybeBabyMustache]

I just ran our numbers on opensocialsecurity, and i'm guessing it also has to do with the age of your spouse. Our optimal recommended strategy is for me to draw at 62, and him to draw at 70. DH is 9 years older than me.

[GilesMM]

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Interesting.

What calculators do you use and what assumptions are you making about taxes, spending, investments, and timing trade-offs (62 vs. 70?)?

https://opensocialsecurity.com/  Defaults.

Really?

When I used the default on your calculator (just pressed submit) I got 65 years and a month as best, attached. (When I simply changed the default date to 1956, instead of 1960, I got an even later age: 68 years, 3 months.) This seems to contradict your 62 as best.

And in this interview with Christine Benz, Michael Piper (the author of your calculator) recommends claiming at 62 only for single people in poor health or, in some cases, for the lower earning partner in a marriage, so.

https://www.morningstar.com/portfolios/when-is-right-time-file-social-security-benefits

Here’s his key message, in his own words, from the interview linked above:

”For a single person in average health even, it typically makes sense to file anywhere from age 68 to 70, and that's purely looking at it actuarially. So, we're not accounting for the fact that it's usually advantageous from a tax standpoint to delay benefits. It's also not accounting for the fact that delaying benefits is helpful from a risk-reduction standpoint because you're getting longevity risk protection when you delay benefits. So, for a single person in better-than-average health, yes, it almost always is going to make sense for that person to wait until 70.”

I personally agree with Piper.

We input different ages and PIAs for ourselves and spouses, not surprisingly. My max NPV is clearly age 62 and diminishes with each year of delay.  I'm not sure I see the allure waiting longer as "longevity insurance" into your 90s because 1) your retirement plan is not very robust if it fails in your 90s even with the majority of SS intact through early commencement and 2) unless you have a health/nursing home cost blowout most people spend less in their 90s than 80s.

[SpareChange]

Running it under the default for my birthday, single, and male gives 62 +4 months. If I only change the mortality table to super-preferred it's 68 + 5 months. Median life expectancy for a male currently 62 goes from 82 to 87.5.

The current discount rate used is 2.52% (rate on the 20 year TIPS). If I only move that to 2% it recommends 65 + 6 months.

Lots of moving parts. 

[Ron Scott]

I'm claiming at 62 for sure as it maximizes my lifetime benefit according to all the calculators.

Interesting.

What calculators do you use and what assumptions are you making about taxes, spending, investments, and timing trade-offs (62 vs. 70?)?

https://opensocialsecurity.com/  Defaults.

Really?

When I used the default on your calculator (just pressed submit) I got 65 years and a month as best, attached. (When I simply changed the default date to 1956, instead of 1960, I got an even later age: 68 years, 3 months.) This seems to contradict your 62 as best.

And in this interview with Christine Benz, Michael Piper (the author of your calculator) recommends claiming at 62 only for single people in poor health or, in some cases, for the lower earning partner in a marriage, so.

https://www.morningstar.com/portfolios/when-is-right-time-file-social-security-benefits

Here’s his key message, in his own words, from the interview linked above:

”For a single person in average health even, it typically makes sense to file anywhere from age 68 to 70, and that's purely looking at it actuarially. So, we're not accounting for the fact that it's usually advantageous from a tax standpoint to delay benefits. It's also not accounting for the fact that delaying benefits is helpful from a risk-reduction standpoint because you're getting longevity risk protection when you delay benefits. So, for a single person in better-than-average health, yes, it almost always is going to make sense for that person to wait until 70.”

I personally agree with Piper.

We input different ages and PIAs for ourselves and spouses, not surprisingly. My max NPV is clearly age 62 and diminishes with each year of delay.  I'm not sure I see the allure waiting longer as "longevity insurance" into your 90s because 1) your retirement plan is not very robust if it fails in your 90s even with the majority of SS intact through early commencement and 2) unless you have a health/nursing home cost blowout most people spend less in their 90s than 80s.

It seems weird to me you’d need to wait until your 90s to benefit, but as they say, YMMV.

Piper—who authored your calculator—and most others consistently recommend taking SS at 70 or close to it, except for folks in poor health or having the lower earning spouse go around FRA.

I ran my numbers through the Quicken SS optimizer and the plan was my wife at FRA and me at 69 and 8 months. (I don’t want the taxable income earlier either, so I’m happy.)

[mistymoney]

Running it under the default for my birthday, single, and male gives 62 +4 months. If I only change the mortality table to super-preferred it's 68 + 5 months. Median life expectancy for a male currently 62 goes from 82 to 87.5.

The current discount rate used is 2.52% (rate on the 20 year TIPS). If I only move that to 2% it recommends 65 + 6 months.

Lots of moving parts.

can you explain what the tips influence is here?

[SpareChange]

Running it under the default for my birthday, single, and male gives 62 +4 months. If I only change the mortality table to super-preferred it's 68 + 5 months. Median life expectancy for a male currently 62 goes from 82 to 87.5.

The current discount rate used is 2.52% (rate on the 20 year TIPS). If I only move that to 2% it recommends 65 + 6 months.

Lots of moving parts.

can you explain what the tips influence is here?

Here's Piper's explanation...

https://obliviousinvestor.com/claiming-social-security-early-to-invest-it-what-rate-of-return-discount-rate-should-we-assume/

[mistymoney]

Running it under the default for my birthday, single, and male gives 62 +4 months. If I only change the mortality table to super-preferred it's 68 + 5 months. Median life expectancy for a male currently 62 goes from 82 to 87.5.

The current discount rate used is 2.52% (rate on the 20 year TIPS). If I only move that to 2% it recommends 65 + 6 months.

Lots of moving parts.

can you explain what the tips influence is here?

Here's Piper's explanation...

https://obliviousinvestor.com/claiming-social-security-early-to-invest-it-what-rate-of-return-discount-rate-should-we-assume/

thanks!

I'm assumingwhen he said rates above inflation - that is the coupon rate for tips - with the value keeping up with inflation?

I wasn't sure what this meant?

That is, if you have, for example, decided that filing at 62 and using a 70/30 portfolio is an appropriate level of risk, what about instead filing at 70 and using an 80/20 portfolio? (To be clear, I’m just making up the 80/20 figures here. The actual percentage would depend on the size of your Social Security benefit relative to the size of your portfolio. The idea is to keep the same level of risk, but have more Social Security and less bonds.)

Is he suggesting the social security takes up bond space in your AA? That makes sense - but at what time?

If overall risk target is that 70/30 AA, and stache plus social security means the stache is good at 80/20 - is that effective at 62? wheneve you retire? only when you get to 70 and claim the big check?

[secondcor521]

I'm assuming when he said rates above inflation - that is the coupon rate for tips - with the value keeping up with inflation?

Yes, it's the real rate based on secondary market pricing.  You can find the description in the second paragraph ("Daily Treasury PAR Real Yield Curve Rates") at https://home.treasury.gov/policy-issues/financing-the-government/interest-rate-statistics?data=realyield

I wasn't sure what this meant?

That is, if you have, for example, decided that filing at 62 and using a 70/30 portfolio is an appropriate level of risk, what about instead filing at 70 and using an 80/20 portfolio? (To be clear, I’m just making up the 80/20 figures here. The actual percentage would depend on the size of your Social Security benefit relative to the size of your portfolio. The idea is to keep the same level of risk, but have more Social Security and less bonds.)

Is he suggesting the social security takes up bond space in your AA? That makes sense - but at what time?

If overall risk target is that 70/30 AA, and stache plus social security means the stache is good at 80/20 - is that effective at 62? whenever you retire? only when you get to 70 and claim the big check?

Yes, he thinks (and I agree) that you should treat your SS benefit like a bond (specifically a 20 year TIPS), because the risk profile of SS is similar to TIPS.

It's for the period of time between when you could start Social Security until the point at which you actually do start Social Security.  It's during that time when you're making the decision to delay.  Before you can claim and after you do claim, the point is moot.

[Ron Scott]

I wasn't sure what this meant?

That is, if you have, for example, decided that filing at 62 and using a 70/30 portfolio is an appropriate level of risk, what about instead filing at 70 and using an 80/20 portfolio? (To be clear, I’m just making up the 80/20 figures here. The actual percentage would depend on the size of your Social Security benefit relative to the size of your portfolio. The idea is to keep the same level of risk, but have more Social Security and less bonds.)

Is he suggesting the social security takes up bond space in your AA? That makes sense - but at what time?

If overall risk target is that 70/30 AA, and stache plus social security means the stache is good at 80/20 - is that effective at 62? whenever you retire? only when you get to 70 and claim the big check?

Yes, he thinks (and I agree) that you should treat your SS benefit like a bond (specifically a 20 year TIPS), because the risk profile of SS is similar to TIPS.

It's for the period of time between when you could start Social Security until the point at which you actually do start Social Security.  It's during that time when you're making the decision to delay.  Before you can claim and after you do claim, the point is moot.

Say you treat it like a bond. You separately saved $500K for retirement, and expect to receive $500K (Net Present Value at time of retirement) in SS during your lifetime. So you tell yourself have $1M in Net Worth. Then you can invest the $500K you’ve saved all in equities (to achieve a 50/50 asset allocation), follow the 4% rule, and spend $80,000 in year 1 and increase it with inflation each year thereafter.

This seems weird for a number of reasons. SORR protection alone would give me pause in an early retirement. Then there’s the trick of trying to spend as much as you could out of your $500K so that you could reduce the draw from savings to match your first SS check in some kind of seamless manner. Too tricky.

I think I’d rather treat it as a separate source of retirement income, and split my $500k savings between stocks and bonds in a manner that met my risk tolerance. I would not spend significantly more than 4% of my savings in early retirement, planning on SS to keep the momentum.