Mother's Social Security Benefit question for you retirees

[FrugalFisherman10]

Hello,
My mom currently is receiving survivor/widow benefits from my Dad's social security account. He made less money than her/earned less credits over his lifetime so his amount is lower than hers. She can live on this fine, and it is holding her over till she decides to begin taking her own benefit. It seems like the longer she waits to take her own benefit, it 'seasons' the calculation a bit...She gets more in perpetuity the longer she waits to start.

I've calculated the amounts in the attachment with some back of the napkin math...not including any return/growth that she may be able to experience if she 'had the money now' kinda thing. Personally I feel since the incremental amounts are so small (a few grand this way or that), any return she'd earn on the money she invested and didn't spend would be pretty inconsequential, but maybe that's just me). (Say if she only needs $18k/yr to live on but she started receiving the $23k per year instead, now, she could invest the difference of $5k each year. That would add up to $15k and change, plus some growth...which I don't think wins out over just waiting till age 70 and immediately getting $10k more per year forever.)

I mainly compare the difference between if she switched to her own benefit now (at age 67), vs. waiting till Age 70...the in between amounts seem like moot points. What do you guys think? Should she wait till age 70 to switch to her own benefit? Seems like the best choice right? Thanks for any help.

     

[Spitfire]

I think waiting is the best idea, especially if she is healthy and you expect her to live many more years. Ignoring the small return on investing the extra 5k per year, she will basically break even at age 73 and go up from there. Even counting the return, she probably breaks even by 74 or earlier.

[Another Reader]

There are volumes written on this subject.  It depends a lot on her other assets.  Does she own a home?  Rent?  What about savings and retirement accounts?  What will happen if she has to go to assisted living or a nursing home?  You might look at the forum over at early-retirement.org for some of these discussions.

[FIREstache]

I think waiting is the best idea, especially if she is healthy and you expect her to live many more years. Ignoring the small return on investing the extra 5k per year, she will basically break even at age 73 and go up from there. Even counting the return, she probably breaks even by 74 or earlier.

That figure of age 73 sounded way too low for a breakeven between 67 and 70.  I checked, and it's 82 to 83 for people with a FRA of 66 or 67 to wait until 70.  So, that's a much longer wait to break even than age 73.

Disregard:  I looked over the OP too quickly and missed that part about collecting on the husband's SS.

[BTDretire]

I think waiting is the best idea, especially if she is healthy and you expect her to live many more years. Ignoring the small return on investing the extra 5k per year, she will basically break even at age 73 and go up from there. Even counting the return, she probably breaks even by 74 or earlier.

That figure of age 73 sounded way too low for a breakeven between 67 and 70.  I checked, and it's 82 to 83 for people with a FRA of 66 or 67 to wait until 70.  So, that's a much longer wait to break even than age 73.

I agree with what you said, in a normal take it now or take it later situation, but this is complicated by the fact that she is collecting survivor/widow benefits on her husbands account and would lose that when she starts collecting under her own name.

[TomTX]

I think waiting is the best idea, especially if she is healthy and you expect her to live many more years. Ignoring the small return on investing the extra 5k per year, she will basically break even at age 73 and go up from there. Even counting the return, she probably breaks even by 74 or earlier.

That figure of age 73 sounded way too low for a breakeven between 67 and 70.  I checked, and it's 82 to 83 for people with a FRA of 66 or 67 to wait until 70.  So, that's a much longer wait to break even than age 73.

I agree with what you said, in a normal take it now or take it later situation, but this is complicated by the fact that she is collecting survivor/widow benefits on her husbands account and would lose that when she starts collecting under her own name.

Yep, it's totally different from the "normal" situation.

[FIREstache]

I think waiting is the best idea, especially if she is healthy and you expect her to live many more years. Ignoring the small return on investing the extra 5k per year, she will basically break even at age 73 and go up from there. Even counting the return, she probably breaks even by 74 or earlier.

That figure of age 73 sounded way too low for a breakeven between 67 and 70.  I checked, and it's 82 to 83 for people with a FRA of 66 or 67 to wait until 70.  So, that's a much longer wait to break even than age 73.

I agree with what you said, in a normal take it now or take it later situation, but this is complicated by the fact that she is collecting survivor/widow benefits on her husbands account and would lose that when she starts collecting under her own name.

I looked it over too quickly and missed that key info.  I updated my earlier post.

[FrugalFisherman10]

There are volumes written on this subject.  It depends a lot on her other assets.  Does she own a home?  Rent?  What about savings and retirement accounts?  What will happen if she has to go to assisted living or a nursing home?  You might look at the forum over at early-retirement.org for some of these discussions.

She owns her own home outright. Worth probably about $125-135k.
She has about $200k in other assets, with a financial advisor. I think it is all invested, save for about $25k in cash. The $175k invested is invested pretty conservatively.

[Another Reader]

There are volumes written on this subject.  It depends a lot on her other assets.  Does she own a home?  Rent?  What about savings and retirement accounts?  What will happen if she has to go to assisted living or a nursing home?  You might look at the forum over at early-retirement.org for some of these discussions.

She owns her own home outright. Worth probably about $125-135k.
She has about $200k in other assets, with a financial advisor. I think it is all invested, save for about $25k in cash. The $175k invested is invested pretty conservatively.

First thing I would do in your shoes is find out where the $175k is invested.  That may make a difference. 

In the end, if she ends up in a nursing home, all of her assets, including the house, may go to pay for her care in addition to the Social Security income.  If more income today would give her a more comfortable life, taking the higher Social Security check or using some of her investments to accomplish that might be the wise choice.

[FrugalFisherman10]

Definitely going to take the higher SS check eventually..the question is "when"...? Are you following?

I will need to look into where the $175k is invested. I believe it is mostly in IMOLX (eye roll emoji)

[BTDretire]

IMOLX
 Oh man, that thing is sick. It has lost money since 2002 until now.
Especially with that 2.01% expense ratio.
 Plus I see it has a 25% turnover ratio,
I don't know if that generates any extra taxes or loses or what.
 Is there anything positive about it?