The Answer is Actually Pretty Simple…IF…
…you know when you’re going to die.
Sorry folks, but it literally comes down to your life expectancy. If you are going to die at an early age, say 80 or less, you should take Social Security at 62.
If you are going to live into your 80’s, take it at your Full Retirement Age.
If you’re going to live into your late 80’s/90’s delay taking your benefit until you’re 70.
Okay, we’re done here. Thanks for reading… BWHAHAHA
Not so fast! There is so much to unpack here. First and foremost, we’re talking for SINGLE people. We are NOT talking for married couples. Married couples have a lot more considerations than singles do. And as such, it’s much easier to get a gauge of when to take Social Security if you’re single.
My recommendation for single people is that unless you think you’re going to keel over tomorrow because of a climate catastrophe, at least wait to take your benefit until your Full Retirement Age. That is the safest bet, in terms of splitting the difference of living too long and not having enough Social Security benefit and dying too quick and not having received very much of your benefit.
Now, I did run a BUNCH of numbers using Right Capital software and incorporating expected returns, COLAs, varying life expediencies and even expenses, definitely see the linked videos for the details.
I actually think a lot of people misread life expectancy tables and think they’ll die at 78 or they’ll live well into their 90’s. If you’re of Social Security age today, NEITHER of those are likely to happen.
Remember, when you hear “Americans have a life expectancy of 78”, that’s for a NEWBORN, not a salty veteran of 62 years. If you’re in your 60’s you’re most likely going to live well beyond 78.
Also, remember that when you hear “more and more people are living into their 90’s”, those people are still the outlier. If you’re 65 today, you’re life expectancy is your early to mid 80’s depending on if you’re a man or woman.
So the safest bet would be to take Social Security at your Full Retirement Age. I would say there’s a 50% probability taking it at your FRA will net you the most benefit, a 25% probability taking it early will and a 25% probability taking it at 70.
Are those numbers based on any specific statistical evidence? No. But if you look at the SSA actuarial tables there is a REASON why you get your PIA at your FRA, a reduced amount before your FRA and an increased amount after. Yet, most people default to take it early…sadly in my opinion. (Again, I think they believe their life expectancy is 78 and make a huge error in claiming early. If their life expectancy was truly 78 claiming early makes sense, of course.)
Oh, by the way, in those videos, I also show what happens if you take early and INVEST, as many people seem to think this is a panacea. I don’t know why.
The only true determining factor of when you take Social Security is literally your life expectancy. So before you pull the trigger on Social Security have a true, well thought of gauge of how long you’re expecting to live and only then will you be equipped to make the best decision.