Farewell Yield – A discussion on when to take Social Security

Following is a portion of a larger article. I urge you to read the full post at the link below.

2. Delay Social Security. This has always been a smart idea. With bond yields so low, it now looks even more compelling. Imagine you were born in 1958, so you turn age 62 this year. For purposes of Social Security, your full retirement age is 66 years and eight months. If you were eligible for $1,000 a month at that point, you might instead opt this year for a reduced benefit of $716 per month or wait until age 70 and get a delayed monthly benefit equal to $1,267. Suppose you postpone benefits. How long does it take to recoup the benefits you missed by not claiming at age 62?

Let’s assume that, no matter when you claim Social Security, you invest your benefits in government bonds, which arguably involve similar risk. Those bonds earn an after-tax return equal to the inflation rate—a generous assumption these days. The bottom line: Claiming at age 62 is the smart move if you’re dead by age 78. But if you live to that age or later, you’re better off delaying to your full retirement age of 66 and eight months.

What if you wait until 70 to claim Social Security? By age 80, you’re ahead of where you’d be if you claimed benefits at 62 and, by age 82, you’re ahead of where you’d be if you had claimed at your full retirement age. What’s the life expectancy of someone in their mid-60s? It’s age 85—somewhat less for men, somewhat longer for women. The upshot:

Thanks to today’s modest bond yields, delaying Social Security looks even more attractive. That’s doubly true if you’re married, you were the family’s main breadwinner and hence you have the larger Social Security benefit. The reason: Even if you die early in retirement, your benefit may live on as a survivor benefit for your spouse.

Who shouldn’t delay? If you’re in poor health—or if you’re married and you’re both in poor health—claiming early likely makes sense. You might also claim right away if you’re that rare retiree who is 100% invested in stocks and thus claiming early means you can leave your stocks to grow for longer. But if you’re in good health and you’re claiming early so you can leave your bond portfolio untouched for longer, you’re likely making a mistake.

Source: Farewell Yield – HumbleDollar


  1. What difference does it really make when you start your SS benefit. As the SSA figures you will get almost the same amount of money no matter when you start. If you need the money, like I did you start at 62. I am Now almost 65 and taking SS benefits early has allowed me to pay off $28,000 in debt, save $10,000 in an emergency fund and lease a 2020 Ford Edge..I am low income and waiting until FRA or 70 was never for me, as I quit working at age 50; living on a small military pension, while waiting for SS. .


  2. Interesting point about delaying early withdraw due to low bond yields. I am a few years away from claiming but my plan was to have my wife claim first as a inflation fighter on my pension and delay mine for as long as we could.
    There really not been extreme inflation (like the late 1970’s and early 80’s) and saving interest rates have been way too low for years. Delay withdrawing might provide more income than holding cash or bonds during that period between age 62 to 70 for me. I’ll have to see what the numbers work out to be at the time, 5 years from now.


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