Every is talking about how the break even date for taking Social Security early is about 78 years old. This is younger than the median age of death for someone who has lived to 65. According to the latest studies, a man has a 50-50 chance to make it to 82 and a woman has a 50-50 chance to make it to 85-- IF THEY LIVE FIRST TO 65.
So, if you take Social Security at 62 your break even date is before the date you have a 50-50 chance of living to. Your lose, right?
Well not exactly. What is missing from most analysis of the break even date of early Social Security for people who retire early, is the cost of taking money on your investment accounts (401k, 403B, IRA and Mutual Funds) to make up for the missing Social Security Checks. (If you retire at 62 but don't collect SS until later.)
How much do you expect to get from a typical balanced portfolio on average in 20-30 years?
If your investment return average (CAGR) in your retirement accounts is:
4% nominal- then your break even date is 82
5% nominal- then your break even date is 84
6% nominal- then your break even date is 86
7% nominal- then your break even date is 89
8% nominal- then your break even date is 94
9% nominal- then your break even date is 97
all assume a 2% annual SS COLA.
(I am thinking that if we don't get at least a five percent nominal return in the next 20-30 years from a balanced portfolio of 60-40, our economy is in trouble. Subtract 3% from these figures for a real return.)
Check out this article for more analysis:
https://www.cbsnews.com/news/should-you-start-social-security-early-and-invest-your-benefit/
Submitted August 17, 2018 at 05:47AM by KillingTime56 https://ift.tt/2BqfSro
