# Is there any value to delaying Social Security benefits other than risk reduction for early-retirees?

I have hopes of retiring early, hopefully around 55-60, and am making contributions to my 401k and regular investment accounts accordingly. I plan to live off of growth of my savings, and not retire until said growth substantially outstrips my living expenses.

My understanding is that Social Security benefits are dependent primarily on your best 35 years of income, as well as when you start benefits, and it appears that starting benefits at 62 will result in benefits valued at 57% of the benefits received if starting at 70.

That sounds bad, but doing the math, if I begin taking the benefits at 62 and just invest that income (assuming the standard 8% return), I can live my life from 62-70 the same as I would have if I waited until 70 to start benefits. In that time I will have saved several hundred thousand dollars, from which the 8% return will exceed the benefit amount itself.

Running that into the future, the total income from growth and benefits will always be greater if the benefits were started at 62 instead of 70. By the time I start at 70 my benefits plus return will be 5% lower than my benefits would have been if starting at 62, and will always remain 5% lower. If the market returns 7% instead of 8% the two options are roughly equivalent.

It seems like a lot of people decide to wait until 70 to start benefits. I can only see two possibly benefits of doing so:

• Eliminate the risk of the market underperforming the 8% benchmark over the long term (20+ years of retirement).
• Increase benefits using higher late-career-life earnings to knock out lower income years from youth. Not relevant for early retirees

Is there a flaw in my reasoning or math, or some other fact that I'm unaware of that makes delayed benefits appealing? Or does the entire decision come down to risk analysis.

• Are you married or do you plan on being married? That plays significantly in the computation. Also how old are you now? – Pete B. Feb 3 '20 at 18:01
• The problem here is that "assuming the standard 8% return" is an assumption, not a guarantee. Some years, like the past several, you might get that or better. Other years you might not. On average, and after inflation, market returns are less than 7%. – jamesqf Feb 3 '20 at 18:20
• "It seems like a lot of people decide to wait until 70 to start benefits." - only about 4% of people wait until 70. – Joe Strazzere Feb 3 '20 at 18:22
• @Nicholas - the most popular age is 62. usatoday.com/story/money/personalfinance/retirement/2018/06/19/… I think sometimes we forget that our self-selected group here is not necessarily representative of the population as a whole. – Joe Strazzere Feb 3 '20 at 23:50
• Another point to consider is that some percentage of SS is not subject to income tax. (The exact percentage depends on income, and seems to require a fairly complicated calculation.) Thus if you spend other money while waiting for a larger age 70 benefit, you'll likely pay less tax on the benefit than you would the same amount of regular income - say withdrawals from traditional IRA/401k plans. – jamesqf Feb 4 '20 at 5:21