iceport wrote: ↑Wed Sep 15, 2021 1:55 pmThank you, #Cruncher, for the table and spreadsheet formulas [in
this post]. ... is this a look "under the hood" at the very same computations going on over at Mike Piper's Open Social Security?
It's similar. But
Open Social Security calculates the probable present value more accurately. Instead of assuming benefits 100% until life expectancy and then nothing, it weights every year by the probability of each person (or both people or either person) being alive that year.
iceport in same post wrote:I recognize the changeover on the age 70 line for a single male going from delaying being worth more than claiming earlier to being worth very slightly less.
It's actually slightly more, not less. The age 69 benefit is $34,800 and the present value of the additional $2,400 is $36,100. (See table below.)
iceport in same post wrote:I have been running these same numbers, but I've found that for a single male like me, the expected value of the delayed scenario is not large enough to be decisive, especially given the level of uncertainty involved.
The uncertainty works both ways. It doesn't favor either starting early or delaying. You seem to be assuming starting early is
prima facie better, iceport, and a strong argument is required for delaying. I look at it differently. Granted we don't know when we'll die, we do know when we're
likely to die. So, if you can weather the worst case of either option (and given your wealth, you can), it's best to take the option more
likely to be better.
Say you had twenty chips bet in roulette and your fairy godmother offers to put down two more. Would you say "no thanks, given the uncertainty, increasing my odds 10% isn't enough"?
tj wrote: ↑Wed Sep 15, 2021 2:10 pmI'm confused by this [the table in
this post]. If I understand this correctly, for a single man it's mathematically superior to claim at 65 than to choose 66 or 67. And 68 is better than to choose 69 or 70?
No, the table is just showing that the benefit of a one-year delay from 64 to 65 is
better than from delaying one year from 65 to 66 or from 66 to 67. Likewise the benefit of delaying one year to 68 is
better than from delaying one year to 69 or delaying one year to 70. In
every case there is a benefit from delaying one year, but the size of the benefit varies. (This is partly because the SS rules cause the yearly increase from delaying to vary. E.g., for a person with a Normal Retirement Age of 67 and a $2,500 PIA, the increase from 62 to 63 and 63 to 64 is only $1,500; but then it jumps to $2,000 for the next one-year delay to 65.)
This can be better seen in the next-to-right-most column of the table below. The best improvement is $13,800 from age 64 to 65 and the least improvement is $1,300 from 69 to 70. I've also added a column showing the advantage / (disadvantage) when based on the expectancy of
both members of a couple being alive. (This is relevant when deciding when it's best for the
low earner to claim.) It shows three one-year delays (66 to 67, 68 to 69, and 69 to 70) when the increase in present value is
less than the one year's benefit forsaken.
Code: Select all
Annual 1 Year --- PV Incr --- - Vs Prior Yr -
Age Benefit Incr Man Both Man Both
--- ------- ----- ------ ------ ------ ------
62 21,000
63 22,500 1,500 30,800 24,200 9,800 3,200
64 24,000 1,500 29,500 23,100 7,000 600
65 26,000 2,000 37,800 29,400 13,800 5,400
66 28,000 2,000 36,200 28,100 10,200 2,100
67 30,000 2,000 34,600 26,700 6,600 (1,300)
68 32,400 2,400 39,700 30,400 9,700 400
69 34,800 2,400 37,900 28,800 5,500 (3,600)
70 37,200 2,400 36,100 27,300 1,300 (7,500)
For reference here is the table from my
previous post expanded to show a fourth category for Both alive:
Code: Select all
Row ColA Col B Col C Col D Col E Col F Col G Col H Col I Col J Col K
1 Born 1962
2 NRA 67
3 PIA 2,500
4 Rate -0.57%
------ Life Expectancy ------ Annual -------- Change in PV --------
5 Age % PIA Man Woman Both Either Benefit Man Woman Both Either
Code: Select all
6 62 70.00% 20.08 22.90 16.07 26.91 21,000
7 63 75.00% 19.35 22.07 15.40 26.02 22,500 30,800 35,400 24,200 42,200
8 64 80.00% 18.62 21.26 14.75 25.13 24,000 29,500 34,000 23,100 40,700
9 65 86.67% 17.89 20.45 14.10 24.25 26,000 37,800 43,500 29,400 52,200
10 66 93.33% 17.18 19.65 13.46 23.37 28,000 36,200 41,700 28,100 50,100
11 67 100.00% 16.47 18.86 12.83 22.50 30,000 34,600 39,900 26,700 48,200
12 68 108.00% 15.77 18.07 12.20 21.64 32,400 39,700 45,800 30,400 55,400
13 69 116.00% 15.07 17.30 11.59 20.78 34,800 37,900 43,800 28,800 53,100
14 70 124.00% 14.39 16.54 10.99 19.93 37,200 36,100 41,700 27,300 50,800